A whole range of news coverage leads one to the inevitable conclusion that we are at a potential inflection point in the long term relationship between what economists call ‘the factors of production’. These factors are usually stated as being land, capital and labour, with enterprise touted as a potential extra when I was at college – possibly because top managers did not like being classified as labour!
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Watching Brief – October 2021
Pottering About
Last month I wrote that this was often the time of year for bumpy markets and I was not wrong for 2021.
Issues that are potential headwinds and which have blown up somewhat more briskly in the last few weeks include:
Midweeek Musings – we’re all doomed
As Private Fraser used to tell Captain Mainwaring…
I read another piece from Noriel Roubini, the academic economist who shares Fraser’s positive oulook, within a few hours of a news item that explained how the UK government had to cover much larger interest payments due to a change in gilt yields. These 2 items fit together.
Midweek Musings
Digging Deeper – September (as requested)
Watching Brief – September 2021
Pottering About
We are entering a hazardous time of year for investors, so an ‘accident black spot’ sign has just flashed, as we happily motor along with our portfolios running sweetly and the speedometer reading some 10% above the legal speed limit which seems fine given the conditions. The speed being our enthusiasm for risk!
According to Investopedia, the (ancient) Dow Jones Industrial Average has declined 0.8% on average in September months since 1956 and the S&P500 (more realistic a measure) has declined 0.5% on average over an unspecified period. This is said to be a global pattern, not just affecting US markets. In fact, the NASDAQ, established in 1971, has performed much the same.
In more recent years, September sell offs have been less significant but that might just be because trading is now more dependent on algorithmic decision making and less on human behaviour and the summer holiday season of the Northern Hemisphere!
Does that mean we should be selling equities and sitting on cash (or more cash for most of us)?
I would suggest that would introduce potential market timing errors, although banking profits, especially if you need a return from your assets to maintain your lifestyle or fund some purchases, must make sense.