By: Matt Garrott
Despite the usual myriad of things to worry about, market returns were strong in the third quarter. The S&P 500 gained 5.9%. The Bloomberg US Aggregate Bond Index rose 5.2%. A diversified portfolio benefitted from strong small and midcap returns as well as international equity strength.
Kicking off the fourth quarter usually means welcoming pumpkin spice season or spooky season. Every four years, though, it’s Presidential election season, which can feel scary on its own. This is likely our last commentary before the election. We don’t have a house view on who will win or who should win. Our election take is that investors should express their politics with their vote, not their portfolio.
The Federal Reserve can’t catch a break. They are the market’s favorite scapegoat. Anything that goes wrong in the markets or economy will eventually get pinned on the brain trust at the Fed. A few short weeks ago, though, the Fed was riding high. They had tamed inflation and shifted their focus to achieving full employment, reducing rates by 0.50%. Talking heads whispered that maybe the Fed got it right this time. Maybe this is a soft landing. It looks like the Fed got inflation under control just in time for an expanding conflict in the Middle East and threat of a massive workers’ strike at US ports (a tentative agreement has been reached here lasting through January) – both potentially inflationary events. To top it all off, if the strike had lasted long enough, it would have shown up in employment numbers right before the election. It’s impossible to tell how big an impact events such as these will have on economic data or the markets as they are unfolding. One thing is for certain. No matter what happens, someone’s going to blame the Fed.
It’s funny how much attention has been paid to artificial intelligence as the next disruptive force in the economy when disruption is weeks (maybe days) away due to more mundane factors. Two feet of rain dumped on Spruce Pine, North Carolina may interrupt the supply of the high-purity quartz required to make microchips. Longshoremen walked away from ports, temporarily snarling supply chains. Nature and human nature both have the capacity to strike (pun intended) suddenly. Did any economist or market strategist predict this in their January preview of 2024? Absolutely not. Remember this in December when they are predicting the S&P 500’s return out to a tenth of a percent. Long-term investors win by planning, not by predicting.
###
Market Commentary Disclosures
Fairway Wealth Management LLC (“Fairway”) is an SEC Registered Investment Adviser. Registration does not imply an endorsement of the firm by securities regulators nor does it indicate that the adviser has attained a particular level of skill or ability.
This post represents the opinions of Fairway as of the date indicated and may contain forward-looking statements, predictions and forecasts. Forward-looking statements necessarily involve risks and uncertainties, and undue reliance should not be placed on them. There can be no assurance that forward-looking statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Past performance is no guarantee of future results. Market conditions can vary widely over time and can result in a loss of portfolio value.
This post is prepared using third-party sources. Fairway considers these sources to be reliable; however, it cannot guarantee the accuracy or completeness of the information received. This information is educational and general in nature and is not intended to be, nor should it be construed as specific investment, tax, or legal advice. Charts are provided for the illustrative purpose of general market commentary. No client or prospective client should assume the above information serves as the receipt of, or substitute for, personalized individual advice.
