Headwinds

Several years ago the Boston Globe invited me to make a presentation at an annual public event.  I thought it was a good time to take my family on a visit to the Boston area.  But March weather in Boston is very different than Arkansas March weather.  After checking into the hotel, we decided to have dinner in a fish house down the street.  After our meal, we stepped out of the restaurant straight into the face of a Nor’easter.  The wind was so intense it felt like we could lean forward about 45 degrees without falling forward.  We pressed on heads down, buffeted by the winds so loud that I could only scream, “Head for the hotel!”

That experience reminds me of the current financial markets.  About the time we seem to be settling into more good returns for stocks, we have a down week.  Since the beginning of the year, stocks seem to have moved only sideways.  We are about where we were at the New Year.

The market is fighting headwinds.  Everyone knows that the Federal Reserve is slowly changing its policy to get interest rates back to normal.  Normal is higher interest rates.  The market has to factor higher rates into the price of stocks.  Since no one knows when and how quickly interest rates will rise to normal, there is uncertainty.  The stock market hates uncertainty.

Everyone knows that getting interest rates back to normal is good for the economy in the long run.  It’s just fighting through these headwinds that frustrates investors.

My family and I got back to the hotel where it was quiet and warm.  The stock market will get back to normal, too.