If it’s not one thing then it is always going to be something else. The market is never satisfied unless it has something to worry about.
Just think back to when a feint line was finally drawn under three troubled US banks. No sooner did that happen than the line was moved to include two more US lenders. This could go on until the market finally gets tired of talking about banks. That day will come. But until then, we can only groan with despair.
Then we have the Fed, which, as expected, announced a 0.25% increase in the Fed fund rate. But the market still isn’t happy, though. They are now worrying about what could happen at the next meeting of the rate-setting committee. They now want to know when the Fed will start cutting interest rates.
What about the US debt ceiling? What indeed? The regular arm-wrestling contest between Republicans and Democrats is almost as tiresome as it is predictable. The last time that the debt ceiling was reached was during Biden’s first term in 2021. The ceiling was suspended.
Before that, the debt ceiling was reach when Donald Trump was president. It was suspended three times between 2017 and 2021. Prior to that, the debt ceiling was suspended in 2013, 2014 and 2015 when Obama was president.
Essentially the debt ceiling is nothing more than a political game of chicken. So, will the debt ceiling be raised or suspended again this time. Chances are it will. But concerns that it might not are more than enough to set markets on jitters.
Investors need to focus on the long term, which means that we should concentrate on the things we can control and ignore the things we can’t. Income investors need to focus on finding shares that can deliver a continual stream of predictable dividends. The US debt talks is just an annoying obstacle as the market climbs the wall of worry.
The time for us to worry is when there is nothing to worry about. That is when share prices are too high, and the market is too euphoric. Until then, just carry on investing.
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Disclosure: David Kuo does not own any of the shares mentioned.