From Lincoln's Strategy to Modern Markets: Insights on Historical Elections, Financial Trends, and Investment Strategies

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And now introducing Mr Keith Lnton.
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Hi, good morning.
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Today is Monday, August 12th, just about the midpoint of August.
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After last week where we saw lots of volatility, this morning we're seeing a semblance or return to more summer normality as we experience a relatively quiet, open to the markets this morning, something more traditionally expected with summer activity.
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But there's certainly still a lot going on and we're going to talk about all that this morning.
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We're going to start out this morning talking about a little bit of politics, but we're going to take it all the way back to 1860 and that presidential election, as we have a presidential election obviously looming in just a few weeks, and that presidential election as we have a presidential election obviously looming in just a few weeks and the country seemingly divided, and we'll try and put that into some historical context.
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And then we'll move on to financial markets, talk about the activity that we saw last week, what it means, how to potentially position a portfolio after the volatility, and perhaps, as Barron's called it, it's a wake-up call for some of us in our portfolios and an opportunity, after the sharp bounce back, to get the portfolios that we're managing for ourselves in order and be able to have them set up so that perhaps we may have gotten a little bit ahead of our skis, gotten a little bit overexcited, gotten a little bit concentrated, and we'll talk about what we can do to mitigate that and set us up for future success.
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We'll talk about a few different individual stocks and glad to report that Brad will be giving us his insights on the bond market.
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And while the bond market hasn't given us the gyrations that it had a few months ago or a year or two ago, the bond market hasn't given us the gyrations that it had a few months ago or a year or two ago.
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Nevertheless, the bond market is an important constituent, an important component to what's taking place here in the equity market, clearly tied in with the currency markets, and last week we talked about that yen, japanese trade and after that we heard it discussed numerous times throughout the week, and Brad will give us some of his thoughts with respect to what's taking place in the markets and where he sees opportunity in fixed income.
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So now we're going to dive all the way back to 1860.
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Us presidential election.
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I know that many of us feel that we are living in the most contentious, divided period in the history of the United States, but I would argue it's far from that.
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We have been fortunate enough in the post-World War II era to live in an era where there was a lot of unanimity of thought, a lot of similar mindsets and goals here in the United States.
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It was a unique period in history, I would argue.
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But what we're experiencing today, while certainly tumultuous and some reasons for concern, with the social media creating divisions here within our country and foreign actors potentially stoking the flames and we all need to be mindful of that and it was wonderful to see the Olympics bring all Americans together and give us a common cause and a common reason to cheer together.
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We are nevertheless going back to the political season, but back in the political season of 1860, we had a relative unknown come out and receive the Republican nomination which at the time was a brand-new political party for president, and that was Abraham Lincoln.
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He was a one-term Whig representative from Illinois, so we're not talking about a superly experienced politician and his platform back then was not to eliminate slavery although we may look back on President Lincoln and think that he was an anti-slavery politician from the beginning but his platform was not to interfere with slavery in the South, but he was opposed to the extension of slavery into the territories and if you go back to 1860, lincoln and that policy was up against a few other candidates and these candidates had divergent views on the slavery issue, which was certainly important at the day.
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But keep in mind as divided as the country was in 1860, it's easy for us to look back now and know that in 1860 when the Civil War began.
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But if you go back and read most accounts in those early periods prior to the Civil War, while there were certainly lots of fiery rhetoric, by and large most folks thought that war could be avoided and that war was by no means a foregone conclusion.
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And Lincoln was up against.
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Stephen Douglas, who was nominated for the Democratic National Convention, was the nominee and he was calling for each territory's settlers to decide locally on the status of slavery.
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And the Democratic platform here, where each state could decide, alienated many pro-slavery Southern Democrats who wanted the territories open to slavery and they did not want this to be set up for a vote.
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And what this did was it caused the current president at the time, which was Buchanan, to support other Southern Democrats to nominate an additional candidate for president under a different Democratic party called the Southern Democrats, and they nominated someone by the name of John Breckinridge of Kentucky.
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And then, finally, there was an additional candidate who entered the fray.
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A union convention Union was the ticket and this person wanted to avoid the issue of enslavery in its entirety and not even discuss slavery.
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So you had four candidates running for president and you at the time Representative Lincoln received 39.8% of the vote, which still to this day is the second lowest percentage of a winning candidate.
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And perhaps even more remarkably now again, getting back to thinking about how divided the country was today versus then, in 10 southern states Lincoln received no votes, and that was because he wasn't even on the ballot in ten states in the south.
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Now, this is partly because the way the balloting process worked back in the 1860s, but nevertheless not even on the ballot in 1860 for Lincoln in ten states.
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And we talk about Lincoln as being a historical figure, someone who was one of the greatest presidents ever, and that was perhaps because of his political acumen.
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So in 1860, lincoln nominated a gentleman that most folks don't even remember his name anymore, but Hannibal Hamlin was Lincoln's running mate in 1860.
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And he chose Hamlin because he came from the state of Maine and Lincoln was someone from the Midwest in Illinois and it was viewed that he needed to balance the ticket.
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Now it's interesting to compare this to today, back in 1860.
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Lincoln and Hamlin did not even meet in person until after they won the election of 1860.
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And Hamlin was not asked in any way, shape or form for any advice on choosing cabinet members.
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In fact, it was the normal position back then that the vice president really was not very engaged in the political process, and that's perhaps one of the other reasons that we didn't hear much about Hamlin.
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Nevertheless, in 1864, when Lincoln was up for re-election, hamlin was disappointed that he was not chosen to be Lincoln's running mate in that election.
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And this again goes to perhaps one of the reasons why Lincoln is considered one of the best presidents is Lincoln was so focused on maintaining the Union that in 1864, he chose Andrew Johnson of Tennessee to be his running mate.
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And this is a dramatic step, because here he is choosing a person from the opposite party, a Democrat from a slave-owning state, although Johnson, as we'll talk about, was a union person in the sense that he wanted to maintain the union, as opposed to a lot of the Southern Democrats and Southerners who did not.
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But nevertheless, lincoln making a bold move in 1864 in choosing Andrew Johnson to be his running mate.
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Now, why did he do that?
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Well, he did that because the politics at the time was very fractious and Lincoln was very concerned, amongst other reasons, that if the Union did win the war, that if it didn't look like that the Union was going to have a benevolent reconstruction period with the South, that perhaps there would be lots of retribution and it would be almost impossible to bring the Union back together.
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So that was one of Lincoln's strong considerations when choosing Andrew Johnson.
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You can think about Lincoln choosing Andrew Johnson would be somewhat the equivalent of perhaps Donald Trump choosing someone like Bernie Sanders to be their running mate, something that in today's political culture would not only be considered insane but politically just completely unfeasible.
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And you can look back and think about the election of 1864 and the choosing of Andrew Johnson as a candidate, because at the time, just a few short months after getting reelected, lincoln was assassinated and obviously Johnson became president.
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Union won the Civil War and Andrew Johnson now, ironically, you had someone who was.
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Now you've got someone post-Civil War who was a person who was from a southern state, now leading the country.
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So Reconstruction May or may not have gone a lot differently under a different person other than Andrew Johnson We'll never know, but speaks a lot to Lincoln's character.
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And if you look back to the history of this country and the period following the Civil War and the fact that the South did not get burdened with extreme reconstruction costs something that was, for example, that we saw post-World War I with Germany some of these factors in terms of having the Union today and having the country that we are fortunate enough to live in now all this is somewhat a result of choices that Abraham Lincoln made that we typically don't think of on a day-to-day or historical basis.
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And as we think of the contentious political times today, we could all put this in perspective relative to what was going on in 1860, and we can see that, despite the fact that we are certainly a more fractious society than we were back in the pre-Civil War days, we are nowhere near the level of anger, vitriol and divisiveness that we were then, in my opinion.
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So we could start today on this note as we think about the political season and remember that we are all striving for success for this country and, despite our political differences, we come together as we did during the Olympics and root for the USA.
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So rooting for the USA includes rooting for the investments here in the United States and our stocks and bonds and other investments.
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And, as I mentioned, we are seeing this morning a more muted start than we woke up to last Monday.
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S&p futures are up about 13 points, nasdaq futures up about 47.
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Dow is up about 74 points above fair value.
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Positive bias following last week's turbulent action.
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Pre-open gains in mega cap names have contributed to the upside rally.
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Taking a look overseas very quiet markets in the Asia-Pacific region.
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Japan was closed for Marine Day holiday.
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Markets in Asia pretty flat.
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Most European markets also relatively flat.
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The big gainer there is both the FTSE in London and the markets in Italy.
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Both those markets up about half of 1%.
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The rest of Europe up modestly.
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Some news this morning Republican vice presidential nominee JD Vance says political leadership should have more say over Fed monetary policy.
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Former President Trump made similar remarks last week.
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According to CNN, politico is saying that internal communications from former President Trump's campaign have been hacked and they are blaming Iran.
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Bloomberg reporting that Vice President Kamala Harris supports ending taxes on tipped income.
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After President Trump endorsed the plan earlier, brian Moynihan, the CEO of Bank of America, said he would like the Federal Reserve to lower interest rates.
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That's according to CBS News.
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And some individual stocks in the news this morning and some individual stocks in the news this morning Key Bank, symbol KEY, like key, has received a strategic minority investment from Scotiabank symbol BNS.
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That stock's up almost 20 percent or two and a half points this morning.
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Starbucks, up about two points this morning.
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Activist investor Starboard Value has taken a stake, according to the Wall Street Journal.
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Disney this morning is up modestly.
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They unveiled some unprecedented expansions at its parks and resorts at their D23 event.
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Intel, this morning, relatively flat.
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They postponed an innovation event amid continuing job cuts.
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Speaking of job cuts, cisco CSCO aiming to eliminate thousands of jobs, according to Reuters.
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And Tesla this morning down modestly.
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They are stopping the acceptance of orders for the least expensive Cybertruck, while it offers a premium model.
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That, according to Reuters, all right.
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What do we have to look forward to?
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This week?
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We have earnings season winding down.
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About 450 of the 500 companies, about 90% of S&P 500 companies, have already reported results, 80% beat earnings per share estimates and 60% exceeded revenue expectations.
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Retailers take center stage this week, with Home Depot and Walmart releasing earnings.
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We also do get Cisco Systems.
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I just mentioned those job cuts on Wednesday and applied materials on Thursday.
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We do get some very key economic reports this week.
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All eyes will be focused on Wednesday on the Bureau of Labor Statistics releasing the CPI, consumer Price Index for July.
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Looking for that to increase 2.9% year-over-year Core, expected to increase 3.2% year over year.
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Both estimates would be one-tenth of a percent less than June.
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Then on Thursday we get a proxy for how our retailers are doing.
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Are those consumers spending?
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70% of the economy is consumer spending.
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Economists are forecasting a three-tenth of a percent month-over-month gain in retail sales, compared with a flat reading in June.
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Excluding autos, retail sales are seen rising one-tenth of one percent, three-tenths of a percentage point less than we saw last month.
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All right, moving on to the markets, the markets.
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Last week we got a lot of violent activity Mentioned.
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We woke up to Monday a big down day, all sorts of dislocations taking place, barron saying that stocks brought a week of whiplash and it might not be over yet.
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So last week we awoke to a white-knuckle market.
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On Monday, japan's Nikkei index had fallen 12.4% earlier in the day, its worst plunge since 1987, triggered by disappointing US economic data and a surge in the Japanese yen.
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That threatened the yen carry trade, which had supported the flow of funds into everything from US stocks to US treasuries.
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On Monday the S&P dropped 3%, nasdaq fell 3.4%, dow down 2.6%.
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Most observers at the time were saying to remain calm and said take it within the context of the big picture.
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After climbing 15% in the first half of the year and sending more than 30 new closing records, the S&P 500, they said, was due for a bit of a pause, even if it's still likely, they said, to end the year higher.
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They said to keep in mind when the index is gained.
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The S&P has gained at least 15% in the first half.
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It's had an up year just about every single year.
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So history is at least on the market side, despite the swoon.
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But it already had been a tough start to August.
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This is before waking up to the yen situation in Japan and the deep sell-off over there.
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We had experienced mixed earnings from some big tech companies and people were starting to question whether the heavy spending on artificial intelligence had reached the point where it was going to see a true return on investment.
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In other words, where were we finally going to see the AI promised land?
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Investors were starting to question that, and therefore on Monday, with Japan selling off significantly in these concerns weighing on investors' minds, by the end of the day on Monday, the tech-heavy Nasdaq had fallen 13% from its mid-July peak.
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Now it's normal for investors to cycle in and out of different industries and sectors over time, yet tech stocks had ballooned to the point that any natural rotation away from those names would cause waves that were bigger than the typical ripple waves that you might see in a normal market rotation.
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Chris Marangi from Gabelli Investments, saying the move was perhaps magnified by unprecedented concentration, but indexes bounced back strongly on Tuesday, though another down day on Wednesday marked the worst five-day start to a month for the S&P 500 since January 2016, and the worst start for the Nasdaq since 2020.
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And when you put them both together and look at the worst starts for the S&P and the NASDAQ, we were looking at the worst start for both indexes and aggregates since 2011.
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So we weren't used to this as the bottom line and the whiplash ride wasn't over.
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Thursday saw the S&P 500 enjoy its best day since November of 22, boosted by lower than expected weekly jobless claims, and then on Friday we had some relative calm that, at least at the moment, looks like it's seeping into this morning.
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In the end, the S&P ended the week down just 0.04%, while the Dow and Nasdaq closed down 0.6% and 0.2% respectively.
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It was the fourth consecutive losing week for the S&P and the NASDAQ, so Barron's saying this was a wake-up call for the markets.
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So what should investors do now?
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So, even though stocks regained most of the lost ground that they experienced early last week regained most of the lost ground that they experienced early last week Barron says it's good time to get more defensive and to diversify into less highly valued corners of the market than some of the so-called magnificent tech stocks and other richly priced shares.
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Max Wasserman at Miramar Capital says investors should step back and make sure they aren't following the day-to-day whipsaw action of the market.
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Investors should ask themselves are they looking to make trades or are they looking to be investors for the long term?
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And if you're looking to be an investor for the long term, you might take a look at the Magnificent Seven and say to yourself well, they are trading at 32 times earnings, and these premiums may make sense when companies outside of tech aren't producing much in the way of growth.
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Yet earnings for the equal-weighted S&P 500 now are expected this year to increase more than 5% and next year to increase 14%, and that's following a tepid 1% increase in 2023.
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So in other words, in 2023, when the rest of the world wasn't showing much earnings growth, perhaps it made some more sense to bid up big tech stocks.
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But now that they've gone up a lot and the rest of the stock market looks like it's going to recover, it may make sense to look at the other 493 companies in the S&P 500.
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If you look at the equally weighted S&P 500, it's trading about 18 times forward earnings versus 22 times.
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If you look at a market capitalization weighted rate on the S&P 500.
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And then if you were to dive down into the S&P small cap 600 and the mid cap 400, those indexes are just at about 16 times earnings.
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So perhaps this is the time to seriously consider and we've heard this before, but perhaps this time it's for real it's time to rebalance at the very least, or perhaps to even get more aggressive and to more than rebalance into some of the stocks that have not participated thus far in the market rotation.
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So where to do that?
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Well, barron's said, take a look at some more conservative stocks and bonds.
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When you reposition your portfolio, they suggest taking a look at defensive consumer staples which have lagged over the past 12 months.
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They named stocks like Campbell Soup, cpb yielding 3%, consolidated Edison, the utility here in the Northeast ED yielding 3.3%, hershey HSY, mondelez, mdlz and the utility NEE, each of those yielding about 2.7%.
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If you're looking to have a more diversified portfolio, you're not interested in picking individual stocks.
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They suggest taking a look at SCHD, which is an ETF.
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The Schwab US Dividend Equity Exchange Traded Fund yields 3.7%.
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They purchase dividend-paying stocks.
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This fund has had a beta of 0.77, meaning it's about 23% less volatile than the average stock in the marketplace.
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Turning to bonds, barron's saying regardless of what happens in the stock market, investors should be able to count on their fixed income portfolio to provide a backstop.
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That hasn't been the case over the last several years when rates were super low, but now, with the 10-year Treasury yielding a more healthy 4% as opposed to 2%, bonds should provide more ballast to individuals' portfolio.
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Barron's had an interview with the chief economist at Apollo Global.
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His name is Torsten Slocke and he gave his views on the marketplace.
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They asked him what caused the sell-off on Monday and he cited US economic data, having changed the job report the previous week coming in, showing a growth of 114,000 jobs.
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Expectations were for a higher number and that leading to the follow-on effects which we've talked about before, which were the fact that these weak numbers here in the US reminded us that perhaps interest rates may decline.
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This caused weakness in the dollar, caused some strength in the yen, with the Japanese also increasing their interest rates, and the yen carry trade began to unwind on Monday.
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I thought the most interesting part of the interview was when he was asked what his longer-term economic outlook is for the next three to five years, and he said there are a number of things we already know that can help to inform our view.
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We know there has been more deglobalization since 2019, which means more on-shoring, friend-shoring, near-shoring and home-shoring.
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That means more production is coming home to the US and Europe, which means the cost of production is likely to go up.
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Usually, deglobalization is inflationary.
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Next, he said energy transition is a significant theme and it also implies significant costs.
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It is also inflationary.
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Third, we're likely to see more military spending, which is inflationary.
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Spending more on missiles and tanks takes investments away from other uses like capital spending.
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Fourth and finally, he said we could see more restriction on immigration in the US and Europe, which is inflationary.
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So he says if there's one major economic theme in the next three to five years, it's the risk that we will see permanent upside pressure on inflation.
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And he's interested in seeing if Chairman Powell, when he speaks to Jackson Hole, if the Fed may seek to raise their inflation target, perhaps from 2% to 2.5% or another number, given that there are so many factors that could be leading to more inflation in the future than we have experienced in the last 10 or 15 years.
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And he says, in his view we aren't going back to zero interest rates.
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Rates will come down, but he feels they will be higher than they were from 2008 to 2022.
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Let's turn to something that is certainly always on the minds of Americans and that is social security and having money available for us in retirement.
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One of the proposals that President Trump is espousing is to no longer tax social security, and Barron's talking about eliminating taxes on social security.
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And Barron's talking about that eliminating taxes on social security.
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This is the social security benefits that some folks receive and some folks have to pay a tax on those benefits, but Barron's suggesting that eliminating that tax without replacing the revenue obviously could undermine social security's already shaky finances.
00:25:33.756 --> 00:25:44.679
And also, if the tax were to disappear, the argument could be made that this would disproportionately reward financially well-off seniors.
00:25:44.679 --> 00:25:53.452
Most seniors who are not financially well-off currently don't pay tax on their Social Security because they're in an extremely low tax bracket.
00:25:53.452 --> 00:26:01.285
So for the past 40 years, social Security recipients have paid tax depending on their income, or no tax at all.
00:26:01.285 --> 00:26:07.123
There's a 0% bracket, there's a 50% bracket and then there's an 85% top bracket.
00:26:07.123 --> 00:26:11.549
Now one interesting fact is why is the top bracket 85%, not 100%?
00:26:11.549 --> 00:26:23.577
Well, because if you look at the math of receiving Social Security benefits, well, because if you look at the math of receiving Social Security benefits, it's believed that about 15% of the benefits that you receive is an actual return of money you've already put into Social Security, so it's already been taxed.
00:26:23.577 --> 00:26:28.221
So the thought process is it would really be inappropriate to tax that money twice.
00:26:28.221 --> 00:26:54.215
So some concerns that if we were to eliminate the tax on Social Security legitimately, it would be more challenging for the Social Security Trust Fund to survive and alternatively, depending on your political viewpoint, it would also be disproportionately beneficial to the more well-off folks who are receiving Social Security.
00:26:54.256 --> 00:26:54.876
This is not just a US problem.
00:26:54.876 --> 00:26:59.125
China is saying they want to raise their retirement age for their social security system.
00:26:59.125 --> 00:27:00.737
This is receiving a lot of pushback.
00:27:00.737 --> 00:27:06.670
Interestingly, in China, the retirement age for female blue-collar workers is 50.
00:27:06.670 --> 00:27:09.559
For female white-collar workers it's 55.
00:27:09.559 --> 00:27:16.362
And it is 60 for all males, and the Chinese government has said that they want to move very quickly to 65.
00:27:16.362 --> 00:27:18.016
This is receiving a lot of pushback.
00:27:18.016 --> 00:27:32.903
So you can see a lot of what we're experiencing here in the United States is taking place in China as well, and this is because China has a problem that we've been dealing with for some time, and that is that the country is getting older, albeit in China.
00:27:32.903 --> 00:27:40.961
It's getting older at a breakneck speed, meaning a small number of young people in the workforce will need to support a disproportionately large group of retirees.
00:27:40.961 --> 00:27:44.919
Heard that before you have here in the United States, but it's also in China.
00:27:44.919 --> 00:27:54.791
Nearly every demographer in China agrees that the math doesn't add up if they do not raise the retirement age in China.
00:27:54.791 --> 00:28:11.019
In China, within the next generation, more than 500 million people, or 40% of the population, is going to be older than 60 years of age, and if they don't address their crisis, they, like us, will have a difficult time funding retirement.
00:28:11.138 --> 00:28:14.257
Going forward, I mentioned two individual stocks.
00:28:14.257 --> 00:28:16.218
I'm going to turn things over to Brad.
00:28:16.218 --> 00:28:23.703
One company mentioned in Barron's that we know well is Alphabet, often referred to as Google.
00:28:23.703 --> 00:28:32.436
Last week a federal judge found that Google monopolized internet search and that ruling is being held as a landmark antitrust ruling.
00:28:32.436 --> 00:28:41.746
Barron says for a legal matter it is, but they say the jury is out on whether the ruling will significantly change internet search or revenue for Alphabet.
00:28:41.746 --> 00:28:47.962
Other antitrust cases involving Google, and before it Microsoft, had little effect on the internet industry.
00:28:47.962 --> 00:28:55.133
In fact, barron suggesting that the biggest loser from Google being declared a monopoly could be Apple.
00:28:55.133 --> 00:29:11.124
Apple gets its biggest chunk of profits that fall straight to the bottom line from an exclusive arrangement with Google to provide them with about $20 billion a year to be the default search engine on Apple iPhone devices.
00:29:11.869 --> 00:29:41.458
Some are speculating that what Judge Mehta, the judge on the case, may do when he seeks remedy for the Google monopoly may be to force companies would no longer have the benefit of that income.
00:29:41.458 --> 00:29:51.855
And if you look back, what happened in Europe and in Asia when Google could no longer pay to be the default search engine on phones?
00:29:51.855 --> 00:29:56.711
Well, what happened in Europe is, despite the fact that Google was no longer the default.
00:29:56.711 --> 00:29:59.058
They still retained virtually all their market share.
00:29:59.058 --> 00:30:16.890
In fact, the only market where Google lost about 5% to 10% of the market was to Yandex in Russia, which has a search engine that some call superior in Russia but, relatively speaking, anywhere else Google is still the superior search engine.
00:30:16.890 --> 00:30:44.977
So basically, bottom line, if you're looking at the economic impact, a cycle once the market share dominance has become so strong and that therefore encourages very strong pricing power and that encourages competition.
00:30:44.977 --> 00:30:46.730
So what happens when you encourage competition?
00:30:46.730 --> 00:30:55.984
Well, it could be argued, the government's bringing its case against Google, as AI is entering the marketplace and Google is now facing challenges from meta-AI, open AI.
00:30:55.984 --> 00:31:00.618
These are perhaps the greater challenges to Google than the antitrust case.
00:31:01.000 --> 00:31:08.530
Finally, one last stock here in Barron's Parker Hannafin symbol PH, which makes components for automobiles, airplanes and other vehicles.
00:31:08.530 --> 00:31:13.903
Ph has posted 30 straight years of positive free cash flow generation and profitability.
00:31:13.903 --> 00:31:16.637
Some have called Parker Hannafin boring.
00:31:16.637 --> 00:31:23.319
They are a supplier of parts to just about everything that moves and the shares have returned 29% over the past five years.
00:31:23.319 --> 00:31:25.698
Barron's feels this success can continue.
00:31:25.698 --> 00:31:34.741
The stock is still only trading at 20.4 times next year's earnings, which they say seems like an attractive price for a dependable compounding growth story.
00:31:34.741 --> 00:31:43.365
Average analyst price target is about $630 a share, which implies about 10% upside from Thursday's close of 5.68.
00:31:43.365 --> 00:31:45.815
Symbol there again is PH.
00:31:45.815 --> 00:31:47.558
That turned over to Brad.
00:31:47.558 --> 00:31:50.733
Give us some more thoughts, insights this morning.
00:31:50.733 --> 00:31:51.876
Good morning, brad.
00:31:51.896 --> 00:31:53.541
Good morning Keith, good morning everyone.
00:31:53.541 --> 00:32:15.200
One of the problems with being a daily market participant is that you feel every move of the market, and when the market moves are violent you feel it even more, sometimes mentally and physically painful, and I'm sure many of you experience that, and the goal is to try to get rid of that feeling when these crazy movements happen.
00:32:15.200 --> 00:32:17.810
In the bond market we had a gigantic rally.
00:32:17.810 --> 00:32:22.781
The 10-year got down to almost 3.6%.
00:32:22.781 --> 00:32:33.722
Subsequently we've retracted to about 3.9%, which even at 3.95% is still a major move from where we had been.
00:32:33.722 --> 00:32:41.560
On Monday, whatever I had left in my bond trading inventory sold points higher than where they'd been trading on the Friday before.
00:32:41.560 --> 00:32:45.401
But I was also holding a short position in treasuries as a hedge.
00:32:45.401 --> 00:32:59.501
On Tuesday I unwound whatever was left and decided that it was time to step back, take a deep breath, evaluate what had happened and recalibrate not only what I was feeling but where the market was.
00:32:59.501 --> 00:33:13.390
By the end of the week, all the markets had reversed most of the course, and it's incredible because if you'd been away for the week and wasn't getting the news, you may not have even known that anything happened.
00:33:13.390 --> 00:33:21.422
So sometimes you just need to take a step away and just watch Additionally on extreme moves to the upside, even in bonds.
00:33:21.422 --> 00:33:24.980
I think it's okay to take something off the table if the opportunity is there.
00:33:24.980 --> 00:33:28.500
Fortunately this morning, for the moment, things have calmed down.
00:33:28.951 --> 00:33:38.792
My short-term concern for the next week or two has turned towards geopolitical risk, especially any escalation in the Middle East.
00:33:38.792 --> 00:33:41.057
My midterm concern is the election.
00:33:41.057 --> 00:33:57.064
Although all the prognosticators give the pros and cons for each of the candidates in regard to the market, no one really knows what ultimately is going to happen after the election and anything that might come along with that decision.
00:33:57.064 --> 00:34:00.058
So my opinion is enjoy the rest of summer.
00:34:00.058 --> 00:34:01.675
Don't fight anything here.
00:34:01.675 --> 00:34:04.638
Expect a lot of volatility.
00:34:04.638 --> 00:34:13.601
If you're a long-term investor, maintain a balanced account of stocks, bonds and whatever it is that you like to put in there to help balance that account.
00:34:13.601 --> 00:34:24.903
Definitely keep some powder dry for moves like we had last week, because when those moves happen it's nice to have some cash to deploy.
00:34:24.903 --> 00:34:34.695
And again and most important, stay nimble and avoid the tidal waves, but just enjoy the waves at the beach and I'll hand it back to Keith.
00:34:35.338 --> 00:34:35.980
Thank you, brad.
00:34:35.980 --> 00:34:37.114
That's everything I've got.
00:34:37.449 --> 00:34:39.858
Thank you for listening to Mr Keith Lanton.
00:34:39.858 --> 00:34:47.543
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00:34:47.543 --> 00:34:52.679
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00:34:52.679 --> 00:34:52.679
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