Riding the Jet-Star

| May 13, 2022

When I was a kid, I loved riding the roller coaster at Casino Pier in Seaside Heights, New Jersey. The Jet-Star hardly compared to those in use today at parks in Orlando and elsewhere, but the boardwalk provided an inexpensive night out for my gang and me. I think about it sometimes, particularly when we have the levels of volatility in the markets that we are experiencing.

No matter how many times I rode it, I never shook the feeling that the car would fly off of its tracks. That was the fun of it. That and being shoulder-to-shoulder with whatever girl I was with, laughing hysterically at our own stupid fears. Those were great times, but unlike the Jet-Star, volatile markets are no fun at all.

Still, the markets share some similarities. Yes, there are the occasional news stories of a rollercoaster accident. They make the news because they are so rare. There are always the foolhardy individuals who will stand up in the car and get decapitated, but we continue to ride rollercoasters because we know that the car will not drop forever. Our reasoning mind understands that the sharp curve will not send us flying into the ocean.

If we are diversified and don’t stand up in the middle of the ride, either out of bravado or fear, we will ultimately pull up to the exit gate where some college kid will remove the restraining bar. I suspect that many of the people causing today’s volatility are people who bought on margin. Some people may have borrowed against their cryptocurrencies. They stood up in the car and lost their heads.

For the rest of us, investments in the stock market are investments in people working together to produce goods and services that others want and need. There is real value there. Corporate and individual balance sheets are way better than they were before the Great Recession. Banks in particular are in much better shape than back then. Very few real-estate mortgages are adjustable-rate loans.

We are currently working on realizing losses where possible so that we can use them to offset gains in the future. We have been upgrading the credit quality of the portfolios and rebalancing into the declines when feasible. Some markets look very reasonably priced right now.

In the meantime, thank you for your business, and call us with any of your questions and concerns.