Can We Live With A Government Shut Down? We Have Before...

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The latest headline roiling markets this week is the impasse in Washington regarding passage of a funding bill to keep the Federal Government up and running. If an agreement isn’t reached today, the Federal Government will shut down. Based on the sell-off in global stocks on Thursday, the markets are telling us that a potential government shutdown must be a big deal. While it certainly could be for those government workers that wouldn’t have a job to report to during a shutdown, most people will have a hard time noticing a change.

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Don't Over-Drive the Car

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Something odd tends to happen on the race track when a driver pushes harder and harder to go faster; they eventually find themselves going slower despite the extra effort. In daily life, we’ve probably all been caught out by trying to get into the “fast lane” when sitting in traffic just to see brake lights show up in the new lane while the one we just left starts moving. We then change back only to see the situation reverse on us yet again. For investors, migrating from asset class to asset class in an effort to improve performance can often be met with the same frustration.

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Driving on Ice

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This week’s dramatic market movements, with major US stock indexes down over 3% Tuesday as fears over the reported Chinese trade agreement details, Brexit related news coming out of the UK, and a partial inversion of the yield curve for US Treasury Bonds made many investors feel like their investments were sliding out of control. It’s the same helpless feeling you get when your car slides on ice when trying to negotiate a turn in winter. Unfortunately, the natural human reaction to both types of scenarios tends to be the wrong one, potentially leading to a crash.

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