The markets continue to bounce up and down seemingly without any rhyme or reason to it.
As usual, one day one sector rallies upwards and then the very next day gets carpet slammed. Sometimes a sector or stock will run for more than a day, maybe even making a few weeks or a month of it, only to halt its ascent and be thrown into a tailspin for whatever reason.
Bad news on stock can bring out the hammer, bad news in the entire sector can slam all stocks that are in that sector, the entire market could be having a bad day, or just the fact that a stock or sector has been going up a lot could be another reason the bloodletting begins.
Whatever the reason, the Dow Jones Industrial Average is not so far off its all-time high but is dropping again going into the holidays
Other indexes have fared even worse than the Dow. The NASDAQ is off more than 30%. Many individual stocks are off up to 90% or more and not just the obscure no-name stocks. Some very well-loved and well-known names have been literally beating to a proverbial pulp.
Or should I say well-loved stocks previously?
It’s almost like if you have a favorite stock that has survived the carnage of 2022 and may have even been up on the year, which is rare, strap yourself in because the 2022 stock market gods will likely slam it down eventually just because.
Of course, we all know it’s the nasty inflation and the Federal Reserve’s reaction to it that is mostly responsible. Basically, to slow inflation the Fed has to slow demand and that means raising interest rates and removing money from the economic system through a variety of complicated programs.
All of that translates into crushing the wants and desires of the American consumer and therefore the means to acquire those wants, which is their money.
Don’t feel picked on though. Central banks all over the world are doing the same thing to their consumers.
Inflation is worldwide, so consumers all over the globe must be taken out back and flogged with tighter credit conditions so they don’t spend so much.
That decrease in demand will supposedly bring prices down, which of course, is what inflation is.
Making matters worse, as detailed here in Money Matters in previous musings, the supply lines are not getting better. As forecast, they are getting worse. I’ve covered that before so we won’t journey into those weeds but to say you can’t shut down the entire globe’s economies and then expect to turn them on again like a light switch. Of course, the governments of the world probably didn’t have that discussion prior to doing it.
So goes having non-business people in government. My opinion of course. They have never run a business so they basically don’t know how to, and the world economies are in reality the biggest of businesses.
The bottom line here is the world economies are nowhere near fixed. With many land mines ahead including the vaporous bitcoin implosion, inflation gnawing at consumer pocketbooks, retirement accounts getting crushed, supply lines still clogged up and an employment work imbalance, there is little real evidence, at least in my opinion 2023, will be much better. Investors might consider looking at the guaranteed options that are out there in the investing landscape that will safeguard their money, instead of perhaps continuing to plow money into what appears to be, at least for now, a giant slot machine called Wall Street.
“Watching the markets so you don’t have to”
(As mentioned please use the below disclaimer exactly) THANKS (Regulations)
This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License #0L34249. His website is moneymanagementradio.com, and was recently voted Best Financial Advisor in Nevada County. 530-559-1214.