Good morning, good afternoon, good evening. Depending on the part of the world you’re in. This is Jonathan Satovsky of Satovsky Asset Management, “Seeking Wisdom, Wealth, and Wellness.” And the question is, the concept of “Don’t fight the Fed.”
In the last 30 years, I’ve experienced the Federal Reserve tightening money supply or loosening money supply. And when they’re tightening money supply, look out. Quantitative tightening leads to contraction of money and prices of securities declining. Generally speaking, new business formation slows a lot of things. The velocity of money in the economy makes it challenging. And when things are tight and tightening, people assume it’s going to go on forever. When things are loose and they’re loosening, they think they’re going to go on forever. Well, fortunately, nothing goes on forever. Progress does go on forever if you keep planting seeds for a bigger and better future. That being said, it is emotionally, intellectually, logically, societally, and socially challenging to keep planting seeds when times are most difficult. When all the odds are stacked against you. When you have a pit in your belly that you feel like, “Maybe I’d be better off selling everything and waiting for things to get better, and then I’ll buy back at better prices.”
Generally, when you have that pit in your belly if you want to do an experiment, experiment with no more than a 5% shift in your decision-making to avoid something called regret minimization. And you realize that those pits in your belly and those shifts generally happen to most people, people at the most inopportune points when you should be leaning in the other direction. So think about it on your path to Wisdom, Wealth, and Wellness.
Have a great day.