The John Scott Blog - The Power of Uncertainty

John Scott |

 I am so sorry all of us are experiencing the meltdown of the stock market due to uncertainty.  This has been one of the toughest years in my career just watching all the misinformation and fear.  Just know we at Cedrus own your anxiety and live it with you.  We are invested in the same SEI Strategies you are in our life savings too.  This has been tough to swallow, but this is an anomaly.

 As part of my job, I read dozens of news sources every day.  Not because they are all truth by any means, in fact far from it.  But if for no other reason, I had to keep on top of what you are seeing and hearing.  I have enclosed an article below that I think is very cogent and covers more salient facts about the current state of stocks and bonds.  While any double digit loss is unnerving, the fact is that SEI does not take big risks on managers chasing fads and concentrated positions like those over exposed to the FAANG stocks.  So your accounts have experience about ½ of the downside outlined in the article over the past 3 months.  Again, not totally assuring, but SEI is doing their job in all this.  Your portfolios are not “doing nothing”. The various managers are trading everyday attempting to find safe haven in the storm of uncertainty. See the Referenced News Article HERE.

 To be sure, we STILL stand by our advice that cash is king and at historical levels on the sidelines waiting to pounce.  You will see this in M & A first, followed by stocks rising in the same tide, then rising long term interest rates.  This seemingly over aggressive actions by the Fed raising short term interest rates is merely corrective necessity after the anomaly began years ago.  We are paying the piper for a misguided government that thought they could grow the economy by quantitative easing and media messaging despite over regulation and taxation.  Swing and a miss!  In my view, the Fed has reached their goal (not covered much in the media) to bring short term rates high enough to have a place to go if they need to ease someday again.  But clearly that day is NOT today.

 Some are calling for a recession in 18 months.  Well we told you all that 3 years ago when we saw all this developing.  So no new news there.  18 months is a long time.  Stocks will rise before then.  We will build more protective portfolios and assets allocation leading up to then.  But 18 months is a long way down the road.  Don’t quit!

 Grace, JAS