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The Spring

The extensible spring.  Think of the shock absorber on your car.  You hit a bump, the spring is compressed and then releases its energy slowly to cushion the bump. 

Now think of capital markets in the same way.  This time the bump is a constant barrage of regulations.  They kept coming during the Obama administration.  For good or bad, the spring kept compressing.  Under Trump, the regulations have been relaxed, and the spring with all its stored up energy seems to be releasing its energy in an explosion of expansion.  This leads us to believe the markets have expanded (30 new DOW records this year), not back to their reasonable expression, but far beyond.  It leads one to think a rebound is possible, as it returns to where it should be. 

And “should be,” on the basis of growth and market, are the key words.  We are led to believe the markets will settle back to reasonable positions, and this may imply a correction is coming.  A bumpy ride may be afoot. 

Analogy is a wonderful method to explain.  Be aware of analogic imperfections.

A final point rears its unsmiling face.  Both presidents, seeming to live by executive action, can die by the same.  What if, in the next cycle, the Dems come back?  It might well happen.  Then, all those relaxed regulations could be reinstated.  It might well happen.  Back go the  markets.  This creates something of an unstable condition in the markets.  As well, it expresses confusion and therefore instability about investment. No matter who you support, this cannot be good.  Instability is usually bad – unless you think it controllable.  Not wise think.  Ping-pong, ping-pong.

Cycle-by-cycle, we could endure regulation, repeal and back again. You want this?


I hate to say it but Congress has devolved into a jumble of opinion minions, each staking out “moral” or “ethical” positions, which allows them to do little, requiring the President to make decisions they should have compromised upon to create law. 
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