So I had lunch yesterday with my financial advisor and he suggested that I get out of emerging markets. Ordinarily I just do whatever Brad says because I trust him implicitly, plus he has great hair and drives a fast car. But when I saw those red numbers staring me in the face I froze up. With how much effort it takes to sock anything away anymore, the idea of buying high and selling low gave me a great deal of pause. So I said “hold”.
Then today I read that a report released several hours after my stubborn decision showing a contraction in Chinese manufacturing, further indicating a slowdown in their economy. Another article explained that the Argentine Peso’s value is plunging after their government started allowing its citizens to purchase more US Dollars. Headlines proclaim “World Markets Decline”. Naturally I am sick to my stomach and quickly calculate in my head how much my IRAs would need to lose to keep up with the depreciation of an Italian sports car. As I am about to actually get out my calculator, I also see another chart showing that the DOW has also declined 500 points in the last three days. While my heart is beating up in my throat, I come to the realization that I am only 40 years old and have (unfortunately) many years left before I can retire. There will certainly be many more ups and downs over the ensuing two decades. Markets ebb and flow and I have “miles to go before I sleep”–and those metaphorical miles certainly wouldn’t come any quicker by driving a sports car, so to speak.
My original point of even introducing that out-of-control editorial is to illustrate the point that when the equity (stock) markets fall, so do interest rates. Mortgage Bonds have broken back through a ceiling of resistance for the first time in two months and technical signals, as well as the economic factors heretofore discussed, point to lower interest rates on the horizon.