It sometimes happens that someone – client or not – asks me why exactly am I getting paid, for what contribution or task. The question on its surface is not silly: my well-known philosophy on markets and how to run portfolios is focussed on the use of passive vehicles, avoiding a lot of trading and especially controlling costs. What could be simpler than to follow such watch-the-grass-grow approach?
Seems like very little can get in the way of the US economy these days. The policies enacted over the past 2-3 years and the abundant energy of the US consumer are having unexpected, for some, results.
I often make the comparison that investing is like running a marathon, not sprinting for a few seconds or minutes. Time is of the essence, and not necessarily in the usual sense that faster is better.
With some equity markets in the news for making all-time highs, you would think year-to-date results should look more exciting.
You buy a new car and when you go to pick it up you find that it does not have windshield wipers (‘They’ll arrive in a week; just don’t drive in the rain’), the seats don’t stand straight (“Good for your abdominals; don’t take long trips’) and after a few kilometers it loses a hubcap or even a wheel (‘Hey stuff happens; I didn’t assemble the car; stop driving for a while’). Funny? No. Farfetched? Maybe.
After a sizzling end to 2023, with global equities up 9.4% in the last two months (Euro terms), it was perhaps to be expected that the first short week in January would be somewhat muted.
The past week was relatively muted in terms of action, as you would expect in this seasonal period; the whole year was a different story.
When it comes to communicating with the markets and managing expectations, the Federal Reserve Board under Jerome Powell has been one of the most effective official organisations I have seen in my career.
Markets had another good week, buoyed by more news that indicated we are on the path to a gradual moderation of economic activity without falling into a recession.