The market is slightly down this morning as there are more delays in the debt ceiling negotiations and Lowes (LOW) cuts sales forecasts for the year. This is just a continuous trickle of the news of a slowing economy. We don’t know what Washington is going to do and consumers are worried and slowing on home improvements which is symbolic of a slower consumer.
As we have mentioned, interest rate increases are a lagging indicator…. That means the effects take months or quarters to start to have an affect on the economy. The consumer is starting to feel the pain of higher rates. Remember that cheap ARM mortgage, it gets readjusted higher now. The impact will gradually have an impact. Now you add in the debt ceiling negotiations, Wall Street likes certainty, but we have none of that currently. We have a bunch of people in Washington who are not worried about their paycheck or expense accounts, so they are going to do what is right in their minds for the economy in the long run.
They aren’t worried about the consumer if their point is made. The Fiscal Investor is not political, just in action has consequences. The brinkmanship will continue, but we are confident there will be a last-minute deal.
This is why it is always better to be a Fiscal Investor. Get your finances in order and invest for the long term. Chances are if you buy quality and value, you will be ok in 5 years. Even in the short run, you probably will be OK because you are buying quality companies that last. Look at American Micro Device (AMD), it was just 93 recently and now it was around 108 in a month or two. Long-term, brands like Disney (DIS), Nike (NKE), Kraft Heinz (KHC), Pepsi (PEP), and Exelon (EXC) probably aren’t going anywhere.
Remaining focused on the long-term horizon is crucial. Currently, there is value to be found in the market, particularly in strong and enduring companies. It’s possible that one might delay home repairs while enjoying leisure activities like watching Cinderella, having a Coke, and savoring mac and cheese with the comfort of air conditioning.