Managing other people’s hard-earned wealth is a 24/7 job with no vacations. The markets move all the time even if you are sitting on a beach sipping your favorite fruit juice. I have received questions from some investors about the market drawdown and my process. My consistent response has been: Trust the process, even in the face of adversity.
Ouch! August has begun with a bang, with the markets falling sharply with volatility making an appearance while the 10-year Treasury yield slid below 4.00% for the first time since February. A combination of disappointing quarterly reports from members of the “Magnificent 7” club (Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla, and Meta) and the narrative around monetary policy weighed on investor sentiment.
As expected, the Federal Reserve, arguably the most influential central bank on the planet, kept its monetary policy unchanged but offered enough for the market to keep faith with the September FOMC meeting rate cut call. September does make sense but I’m betting on more than that. More cuts are coming.
The CNN Fear & Greed index, which looks at a number of volatility and sentiment figures to gauge investor skittishness, has ticked into “Extreme Fear” mode. Additionally, it is worth noting that August and September have historically been two of the toughest months for the market from a seasonal perspective. If anyone is a contrarian and looking to buy at lower prices, he or she will love this.
One of the core principles I value is the importance of seeing the bigger picture. It is easy to get caught up in the market’s daily fluctuations where emotions run high and impulsive decisions can lead to disaster and miss the forest for the trees. There is no need to throw your Bloomberg keyboard at the monitor.
Over the years, I have learned that even individuals with high IQs or those who are successful in their business ventures can struggle as investors due to poor temperaments. Patience, discipline, and the ability to handle losses and adversity without losing composure are essential traits for successful investing.
Amid all the negativity, trusting the process is essential. Yeah, I have just completed a thorough review of the TM-IM system of proprietary indicators that eliminate emotion from investing or trading. The system “observed” the market action as a case of “temporary” weakness due to panic selling.
Move on, ladies and gentlemen. Wall Street and other markets are experiencing a much deeper sell-off triggered by the unwinding of the infamous Yen carry trade. We might dip further from here to shake out the weak hands. Bull markets typically move in a zig-zag pattern as they progress upward. What do you think?