Viewing entries tagged
debt ceiling

It's Groundhog Day

Tidy. 

The hue and cry of market time and tentative investor alike, when things start to wobble, the best course of action is to head for the hills right? 

Almost assuredly not. 

Let's review. 

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What this nifty little chart, courtesy of J.P. Morgan Asset Management shows us is that over a ten year period the expected downside for owning a basket of stocks, drops from it's one year estimate of -37% to a paltry -1% , which is only slightly more than the risk of owning a portfolio of bonds. The math is known as reversion to the mean, the mathematical precept that over time, all returns converge towards their long-term averages. 

Yet, for those who think that they're reducing their volatility and cutting their risk exposure by "getting out" in the face of daunting times, you'll actually find that the "clock" on time diversification more or less restarts every time you get back in. 

So, if your goals were to avoid the tumult you're actually creating your own embedded level of tumult by resetting the clock on time diversification.

Better to develop and stick to a long-term plan than to raise the risk by moving in and out.  

 

Good Will Punting...

It’s official, being a Senator or Congressmen must in fact be the greatest job on the face of the planet.

I say that because it’s becoming increasingly obvious, that these individuals are willing to do almost anything to either preserve the seat that they currently hold or get elected to one.  

We’ve fallen into a dangerous political time. Over the course of years, administrations from both parties have time and time again, espoused  the advantages of “being welcomed into the “community of Nations.” My guess would be, that being welcomed as such gives you the opportunity to expand your influence, to create a greater global good for all societies including your own. It is in part, recognition of the fact that “you’ve arrived” as a country and a people. 

Evidently, the United States as a global leader, thinks that expanding her global reach and influence includes disrupting the economy of just about the entire planet. And, not because we need to, but because we can.

There exists today, political leaders in Washington who actually believe it would be a good idea for us to go through a debt ceiling debate and push it to the point where we close the government. The sense that I get in the tone of that rhetoric is that going through that ceiling would be good to “teach somebody a lesson.” Little do they know, but the lesson that they’ll actually be teaching, isn’t a lesson based on improving the understanding of one political party or another. It is rather, one they’ll teach to the  broadest slice of the American public and much of the world’s populous. And what exactly is it that they’ll be teaching? 

Unbeknownst to them, what they’ll be teaching us all (and hopefully themselves), is that playing this game over and over again, going through draconian measures, saving your best effort for the worst hour, is both a policy and a ploy replete with failure.

You know you’re at a desperate point when the question “what’s in the best interest of America?” Is best answered by, “doesn’t matter.”

If you're so inclined, no matter what your political persuasion, write or call your elected representatives and asked him for one simple favor, "please, not again."