Hello everyone –
I am trying to post updates every two weeks or so, since most of the audience gets enough emails as it is, and do not need more, but I have received numerous emails regarding the Sequestration situation. I am still 100% S-Fund for the present time. The markets have sold-off somewhat this past week due to fears that it may not get resolved, however support is holding at the 50-day Moving Average of the SP 500. This is a trend line that I use to gauge the markets health, amongst other things.
Today, the markets closed higher, mostly on positive housing news and positive reports from major retailers.
While Sequestration is not a “good thing” for most of us, I question the experts who say it is bad for the economy. I am not so sure that Home Depot will stop selling leaf blowers, or Apple stop selling MacBooks, or Johnson and Johnson stop selling Band-Aids, on March 1. Just my opinion. Will it affect defense contractors and companies such as Lockheed Martin ? Yes. Could it have been done better, prior to reaching Sequestration ? Yes, I think so. But here we are, Feb-26, and we have no solution in plain view.
Some may remember the 1995 Government shutdown.
Lets take a look below at the SP 500 Index from that time frame. Yes, I concede that the 90’s were the “boom years” of the stock market and witnessed many stocks going to record highs. That bull market was a train that was hard to stop. But, the below chart shows basically not even a hiccup during the shutdown.
Is 2013 different ? Yes maybe it is. Is it the same ? Maybe it is. I don’t know. But I am not so sure that market-wise, big picture, some reduced government spending is bad for the markets. This week observed some volatility and hiccups, yes. More conservative investors may wish to go to G-Fund during these periods of volatility. However I am still 100% S-Fund.
As always, thank you for reading.
Bill Pritchard
