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A poignant attempt to demonstrate why it is not wise to get out of the market at its lows ...

February 28, 2023

J.P. MORGAN sent me this chart. It is a poignant attempt to demonstrate why it is not wise to get out of the market at its lows in an attempt to time the upturn and reduce the downside. The best days in the market occur when you least expect it and following a downturn.

I am sharing this with you because the markets are again volatile after a stellar January. I anticipated this volatility because the Fed is not done with pushing interest rates up. In fact, the current yields on short term and long term Treasury bonds have risen in the past week in anticipation of the Fed actions.

I know it is hard to stay the course when your emotions are pushed to the limit, but believe me this is the only action that produces results in the long run. You can move to money markets or bonds to reduce the volatility, but that is a mere bandage of relief and will inevitably produce lower returns over the next year to two years. Markets go down, but always go back up faster in the initial stages of the upturn.

Stay the course, as we have taken a defensive posture in our portfolios without getting out of the market. It will pay off if you don’t panic. I stand ready to answer any questions or to help you understand the current environment and what we expect in the next several months. Keep reading these commentaries as I reveal the truth behind the numbers. This is a time when all the “pundits” willing to sell newsletters scare investors into believing their false hypothesis on markets.

Those pundits will use grains of truth to lure you into their theories, but do not have your best interests in mind. I do. We are diligent in our analysis and watch every number to better serve you. For now, we are positioned to weather the storm of a slow down and to benefit from the upturn when it occurs.

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