The FOMC has botched this thing so badly by waiting so long to start a hiking cycle or more correctly stopping desperately "printing" mode when they should have that we now have headline inflation still sky high, underlying, more leading price indications now rolling over (shipping rates have imploded as has lumber), GDP that has been contracting (maybe it won't for Q3?) and not enough time, based on history, for the hiking they've done to take full effect. The rhetoric has been that they are willing to see job loss and markets crack (arguably that is what they have been doing for weeks now) to get inflation back where it should be. If you didn't read that whole rant, the TLDR is this is a problem of their own making and they have no idea how to fix it.
This is far from a black swan but as is the case with every bear market, they catch people off guard seemingly unaware that bear markets are even a thing. A fire department buddy (not a client) said he's had to change his retirement plan because of the current market event. That is why I write so frequently resiliency in various forms, having back up plans, being less dependent on just one, narrow outcome.
In my quarterly note to clients (hopefully that goes out this weekend), I mention being terrible at predicting things. The Fed under Powell as a merry band of idiots was certainly an easy observation to make four or five years ago but to what consequence? Maybe the one we're having, maybe worse, maybe no consequence? I didn't know but we've been talking about safeguards and precautions more broadly as just trying to mute adverse outcomes somewhat. When you do things like add managed futures. long/short, long VIX and other alt-y defensive measures you will probably get benefits from them when things are hitting the fan but as I like to say, on the way up you own too much and on the way down you wish you owned more.
I would also note the positive effect of knowing you have tried to solve your own problem. The effectiveness on this go around might be the best you've ever done, or not, but you are doing the work and that is unambiguously positive.
The current event will end and then stocks will go back up, eventually making a new high. If you don't believe that then, harsh comment coming, you no longer believe in American capitalism.
Bear markets are one of the costs of doing business, simple as that and holding onto that simplicity is one of the reasons I'm able to avoid getting upset or worrying. Once you truly embrace this reality, navigating markets becomes much easier.
Now, Maui pictures.
Thursday sunrise on Sugar Beach.
Waihee Ridge Trail
Baldwin State Beach
Tatra fire truck, Tanker 3 stationed in Lahaina.
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