Photo: Scott Liddell. Source: Morguefile
It can be upsetting. You don’t know who (or what) is lurking in the shadows. Somebody put that graffiti on the walls, and you don’t feel they had your best interests in mind. Maybe you made a wrong turn, or your GPS didn’t work properly. All you want is to get back to where you were before.
That’s the way the market feels right now. We were moving along at a pretty good clip, with only an occasional bump or stumble. The future looked smooth and inviting. Then the Fed started talking about raising rates more aggressively, emerging markets started breaking down, European banks began feeling tensions in the Euro, Chinese companies keep having disappointing earnings, and everything feels dark and threatening. They’ve even rebooted the old “Halloween” horror movie franchise from the ‘70s. Really, was that necessary?
But like a scary movie, this scary market is based more on perception than reality. The Fed is raising interest rates to reign in the economy before it overheats. To follow the “reigning” metaphor, the economy is like a horse that might run away. The Fed is trying to maintain control, providing guidance and direction to keep things from getting out of control. They can loosen the reins if things start to slow down.
After a scary movie, we walk out of the theater and feel relieved that we’re not in the dark and chilling world depicted in the film. We’ve had a chance to explore frightening scenes and places without actually going there in person. Let’s hope our market’s “Halloween” season doesn’t last too long, and – like the calendar shows – we can enjoy “Thanksgiving” soon!
Douglas R. Tengdin, CFA
Charter Trust Company
“The Best Trust Company in New England”