It’s Crunch Time

In Economy, Federal Reserve, Investment Planning, Stock Market by Landmark Financial Advisors, LLC0 Comments

The severe winter weather in most of the country dampened January’s housing and other economic reports.  Walmart and several retailers have also been reporting weakening results.  Is it the weather or a more serious slowdown that is brewing?

I wanted to include part of a blog post by Joe Davis at Vanguard that sums up a good question…. Is There A Gorilla In Our Midst?

In a famous experiment, psychologists Christopher Chabris and Daniel Simons asked people to watch a video of people playing basketball and count the number of passes. Technically, the answer is 15, but that misses the point of the experiment.

In fact, the right answer was a question: Did you see that person in the cheap, shaggy gorilla suit walking through the middle of the basketball game? About half the people who watch the video don’t notice the gorilla. They are too busy trying to count the passes.

How can anyone miss a gorilla? The answer is selective attention. The human brain tends not to “see” things it doesn’t expect. Lately, I’ve started to wonder whether the Fed taper has distracted us from froth in global stock markets.

We must remember that our Federal Reserve has dumped $2 Trillion on the US economy over the last several years, and we are barely achieving a 2.3% yearly annual growth in the economy.  The sale of single-family homes, townhomes, condominiums, and co-ops dropped 5.1% last month, the lowest level in a year and a half.  We think a bit of caution is warranted.

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