October is the witching hour (in the markets)
They say that October is the witching hour in the markets. In this newsletter we’ll talk about whether or not we believe this is likely to be the case this time around.
Record stimulus to come into play
Stimulus has reached all time highs, propping up demand artificially and leading market participants to believe a rosier picture than is the case in reality. Valuations are lofty and the market has had quite a run. As people lose their benefits, it’s conceivable that there will be more activity in the job market – and there is ample supply to be had.
International dynamics have shifted
The recent withdrawal from Afghanistan has led Biden’s ratings to plummet while destroying the United States’ credibility with its allies. Afghanistan and China have moved into closer alignment – as they share a border – however the true cohesiveness (or lack thereof) of this relationship remains to be seen. It’s also unclear what Russia’s stance will wind up being in the long term.
The shift in international dynamics adds geopolitical uncertainty to the fray, which may in turn set the stage for a more volatile time of things – not only this October but in the immediate to medium term future as these questions eventually resolve.
The bottom line
It’s never possible to predict the market – and none of what we’ve said in this newsletter should be interpreted as such. However what we will say is that when the market crashes, it tends to drop faster than it rises. With so many volatile factors at play, we caution investors to remain grounded. The best precautions to take are the unglamorous tasks that are foundational to a healthy portfolio.
Please review your risk tolerance and if there are any major changes to your life position or ability to take on risk, now is a good time to discuss that with your financial professional. As always, you know how to get in touch with me.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly