Debt Ceiling
From the Wall Street Journal:
"President Biden and House Speaker Kevin McCarthy (R., Calif.) reached a tentative agreement Saturday for raising the nation’s debt ceiling for two years and placing new limits on spending over that period, moving to end a standoff that has threatened a historic default on U.S. government debt and put the global economy on edge."
As I write this Tuesday morning, the markets are little changed, enjoying an uneventful morning. No pop after the agreement struck over the weekend. I've been spending recent weeks trying to ease investor concerns over the debt ceiling, which I viewed as an unlikely risk that was being a bit blown out of proportion.
So now we move onto the next thing, whatever that is. The thing we worry about, that we have no control over, which may or may not manifest into the stock market temporarily going down by 25%.
But as you've spent the past several months worrying, markets have quietly enjoyed a nice year. Most have been surprised to hear how well portfolios have done since last fall. "Oh...really?" they respond, when asking about six month performance. There's a mild shock in their voice.
Most people don't want to be a part of the process, only part of the outcome. Returns without risk. Gains without suffering. What the process actually entails is building a portfolio aligned with one's time horizon and objectives which can also endure the bad things being talked about in the news. And the risks no one is talking about. These day-to-day risks are not meant to be avoided. They are meant to be embraced as the expected road, and to be largely ignored. Those who do that have historically been rewarded in a big way.
The process is where you find out who is worthy of great outcomes. Someone whose behavior is in alignment with what they said they would do when agreeing to an Investment Policy Statement, especially when it doesn't feel good to do it. That's what it takes to achieve great outcomes. And those those are the people that we aspire to partner with.
