This is Just a Test (or is it?)

October 6, 2023by Hoy Grimm0

Cooler temperatures and fall colors are upon us in East Tennessee. Fall always takes me back to childhood memories. I played football at Beech High School in the early 80’s. During almost every practice, Coach Cummings would have our offense rehearse a number of trick plays – flea flickers, end-around reverses and hook and ladder passes. We practiced those plays every week from pre-season in August through the regular season end in October. Coach never called those plays. It frustrated players to work so hard for so long to never get a chance to execute them in a game.

Where were you on October 4th at 2:20 Eastern Standard Time? If you were near a phone or television you heard FEMA conduct a test of our nation-wide emergency EWS communication capabilities. I was on a phone call with a client at the time and the warning even broke into my call and interrupted our conversation. Like my high school football team this was just a rehearsal. What makes it a little weird is that it occurred the day after Russia conducted their own emergency broadcast test. Nothing to worry about though as Russian broadcasts told residents, “The readiness of warning systems is being checked, please remain calm,” speakers said in a stern male Russian voice.

The thing about practice drills is that you work on things for a reason. If it wasn’t necessary, we wouldn’t waste time on it. For some reason the test that disrupted the whole country on Wednesday was necessary now. We are fighting a proxy war with Russia through billions of dollars of aid, weapons and ammunition. That much is realty. I don’t know what is going on behind the scenes in Washington, but they have my attention when they spring these tests.

In our September 2nd post, “Summer Bulls And Autumn Bears” we reminded folks of the seasonal realities that stocks exhibit, “September tends to be a pivotal month for stocks. Portfolio managers like to clean up their investment holdings before quarterly reports go out to fund investors in October. Last September the Dow dropped 8.8%. Since 1950, September has been the worst performing month on the calendar for the S&P 500 and the Dow Jones Industrial Average.” If you paid respect to the calendar flip, you had time to prepare your portfolio.

Sure enough, September 2023 lived up to its statistical reputation. The S&P 500 dropped 4.6% and the Dow Jones Industrial Average fell into negative territory for the whole year. Bonds were battered by the Fed’s relentless effort to shrink their bond holdings from pandemic binge buying.

Now that we’re into October, what should we expect? October has a reputation for two things – extreme moves (think Black Monday, October 1987) and for killing off bear markets. Statistically, October ended 13 bear markets since the end of WW2: 1946, 1957, 1960, 1962, 1966, 1974, 1987, 1990, 1998, 2001, 2002, 2011 and last year’s bear market decline.

In 1981, my senior year, Beech High made it into the TSSAA football playoffs. We finally got a chance to spring our array of trickerations on our unsuspecting opponents. When the coach called that first play, our huddle exploded with excitement and anticipation. Those plays amped up the whole team right when we needed to be at our best. All of our practice time finally paid off and we won the first region championship in our school’s second year open.

Are you “practiced up” mentally? Have you thought through the potential pitfalls of your saving and investment activities? Are you prepared to use your emotions in a proactive way? We would enjoy the opportunity to open our playbook and show you how we help clients Win The Future™.

Hoy Grimm

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