Never Early
Posted on Sunday, September 11th, 2022
This empty nester thing isn’t quite what I thought it was going to be. I think I will file this one under the more things change the more they stay the same. It seems like at least one of the kids is always here. Chris left on Monday morning and Kayla came in Monday afternoon. It’s like a revolving door with food accommodations and menus to match each arrival. I’m just kidding. I love it. It is a bit of a treat in that you get to spend time alone with each child and that was always rare when they were all here. The weather is clearing up and I get to swing a golf club on Wednesday for the first time in 6 weeks. Keep your fingers crossed. I’m a little nervous but I am ready to get back out there.
If you know me then you know that I am a huge history and politics geek. I would also admit, as much as I hate, to being a bit of an Anglophile. The passing of the Queen this week is fascinating to me especially the peaceful transition of power. The Queen is dead. Long live the King. Life and time marches on. If there was one figure from the last century that I would like to pick their brain it would have been Queen Elizabeth. She dealt with 14 US Presidents. She guided her country for 70 years. The insights and knowledge locked in that brain could have filled volumes.
England and Europe are in the throes of an energy crisis. If you haven’t been following along the sanctions on Russia and the war in Ukraine are causing major disruptions in the energy/utilities market in Europe. Their near total reliance on Russia for their energy needs has prices spiking massively the last several months. The thing that you may not realize is that energy and utility companies hedge their transactions. What does that mean? As a driller or supplier, they have the energy, so they sell the futures contract effectively becoming short the product. If that product jumps tenfold, then they must come up with more capital to support that transaction. We are starting to see the latest government bailouts – the bailouts of utilities. You know that we feel that the only real consequential downside moves in the market are due to liquidity crises. If we were looking for a liquidity crisis, then this could be it. Negative unintended consequences of the sanctions. More government bailouts – The more things change the more they stay the same.
This is the third wave down in a bear market. The 3rd wave is usually the most severe, the sharpest and the quickest. It’s also the trickiest to maneuver. Here is one of Reilly’s Rules and it may be the toughest one for me, personally, to implement. It is better to be a little late than a little early. I had a partner on Wall Street that had a great sense of humor and one of his lines that always made me laugh was – Never wrong. Just early. It was his way of putting on a brave face. It was very British in a way. Chin up! He was saying he was about to lose a lot of money. It always made me chuckle.
The options expiration this Friday and the looming FOMC meeting will have a large impact on the market. Markets like Europe, Japan, gold and cryptocurrencies are showing signs of trying to bottom. Doesn’t make sense logically but who said the market was logical. Maybe the market is starting to see something we don’t see yet. The third wave is tricky, but it is better to be a little late to the party than early. Trying to stay patient.
“Short term volatility is greatest at turning points and diminishes as a trend becomes established.”– George Soros
I think we aspire less to foresee the future and more to be a great contingency planner… you can respond very fast to what’s happening because you thought through all the possibilities, – Lloyd Blankfein
A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. – Winston Churchill
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Disclosure: This blog is informational and is not a recommendation to buy or sell anything. If you are thinking about investing consider the risk. Everyone’s financial situation is different. Consult your financial advisor.