The Fear is Often Worse Than the Reality

The recent rapid rise in long-term interest rates has spooked investors. The prevailing sentiment now is that a recession is likely. This is about the sixth time that investors have switched back and forth from anticipating a soft landing for the economy to fears of downturn. At the very least, it shows investors’ skittishness and lack of conviction. Political dysfunction in Washington D.C. certainly has not helped. Concern and fear are rampant.

The best antidote to this fear is information. Thankfully, we are on the verge of getting earnings results for public companies for the third quarter. Most will also offer an outlook for their near-term prospects. Recent results should be solid, and the Bull and his partners also believe that the outlook for most firms is still good. This reality should settle market fear down somewhat, but probably not entirely.

We seem to be in a period where every data point is overly scrutinized for its possible negative implications. The next big fear coming is the possibility of a government shutdown in November. If the American economy ever really depended upon government, we would be as poor as every other totalitarian nation around the world. We aren’t in both cases. We are blessed with a market economy that works despite government. We will get through this period. Stay steady, my friends.

The Lonely Bull