For over two years, we’ve been hearing predictions about an impending recession. Then, there were suggestions that we might experience a soft landing. Recently, though, the topic seems to have faded from the spotlight. Why? I believe it’s due to three key factors:
- The markets had a strong start to the year.
- Aside from the Russia/Ukraine/Hamas/Israel conflict, things were relatively stable and, let’s face it, not directly affecting us.
- Consumers adapted to paying high prices, which became the new normal.
A lot has changed from the beginning of the year until now. Here’s a quick look at some recent events:
- An attempted assassination of former President Trump.
- President Biden’s withdrawal from the Presidential race.
- Escalating global tensions, with Iran now threatening Israel.
- Japan’s Nikkei experiencing its worst day since 1987.
- The Fed’s ongoing reluctance to lower interest rates (which I personally believe is a mistake).
- Lower-than-expected job additions in July and a higher-than-expected unemployment rate, now at 4.3%.
- Warren Buffett selling a significant portion of Apple and moving to cash.
- The VIX, Wall Street's fear gauge, reaching its highest level since 2020.
Needless to say, there’s a lot happening, and people are uncertain about the future. Turn on any financial news channel right now, and you might lose sleep. The word dominating today’s financial news is one we’ve been hearing for years: RECESSION.
However, it’s important to step back and recognize that market-affecting events have always been part of financial history. We’ve seen sell-offs before, yet the Dow crossed 40,000 for the first time ever just a couple of weeks ago.
Remember that your portfolios include assets beyond just stocks. Bonds and other fixed-income positions are added not for extraordinary returns, but for stability during turbulent times. This stability can help alleviate some of the stress you might feel when watching the news.
I can’t predict what will happen next, nor do I have a crystal ball for the markets’ direction. Your portfolios were designed to withstand days like these. It’s okay to be concerned—I am too—but now is not the time to panic. Many of you have faced challenging times with me before, and we’ve weathered them together.
Finally, I want to extend a heartfelt thank you to my clients. On this particularly interesting Monday, I haven’t received a single incoming call from any of you, which I believe reflects your trust in my management of your investments. I sincerely appreciate it. If you have any questions or concerns, please don’t hesitate to reach out.