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The Dog Days of Summer

6/25/2018
The original reference to the Dog Days of Summer is the “sultry part of the Summer, supposed to have occurred during the period that Sirius, the dog star, rises at the same time as the sun now often recognized from July 3rd to August 11th , a period marked by lethargy, inactivity or indolence”. The Summer doldrums, whatever you call it, Summer is here. The kids love the break from school. I personally plan more time away from the office as the Summer is usually a slower, less volatile time for the market – not always.
Last year, Summer was exciting with the anticipation of the eclipse. Though not related to the market, many thought it would have impact. I was so excited that we would be in Wyoming, where the eclipse would be complete. As we sat amazed on a sandbar on the Snake River, it was simply amazing. Magical. Then it was over.
Summer, usually slow for the markets, experienced a “flash crash’ in August 2015. The decline was recovered by October of that year. What lessons can we learn from the past? Stay aware. Short-term moves in the market can be unexpected and are usually not lasting.
There is an applicable Wall Street axiom, ‘Do not chase the market.’ That in my opinion, means both up and down. Rarely are investors successful trading on news that has already happened. Here, you may read, “trade wars, rising interest rates, the reversal of the dollar.” We need to use these events and trends to formulate a thesis going forward in anticipation of future market moves. We position portfolios to take advantage of opportunities created by the economy adapting to the changing environment. Our outlook, there will not be much change until the Fall. If there is a downturn, what themes do we want to exploit if they go on sale. If there is no downturn, we are where we want to be unless something changes. Everything changes…