Why We Didn’t Trade in Advance of the Debt Ceiling Deadline

From the desk of Michael J. Garry 

I debated back and forth whether to write anything during the debt ceiling negotiations, which ended after 6 months of news, more tamely than anticipated. I did get a couple of clients reach out about it, and this is basically what I said to them.

The short answer is that it doesn’t make sense to do anything differently in anticipation of something that may happen.

We forget about them over time, but every year there are a couple of crises or potential crises where it might seem to make sense to not be invested. Most of them go by the wayside with nothing happening.

Sometimes they do happen, and the markets react badly. So far, the markets have always come back and given us worthwhile long-term performance.

Leaving the markets opens up all sorts of questions as to what to do next and when. I have been doing this for 25 years now and I can tell you that every single person who has made me sell out because of anticipating some event or a market downturn has regretted it in the long run.

So when these things come up there may be some short-term pain, but we’ll get past it and then move on to the next crisis. Keeping our asset allocation and increasing our wealth.

In this particular instance, the markets went up several percent over the last month.