The month of August has begun…not that you needed me to tell you that. Kind of a melancholy month for me…still really mid-summer but the days will grow shorter, the crickets will become more apparent signaling the coming of fall and eventually cooler weather. Though generally cooler, I prefer June. Why are we talking calendars? Because August is a month that has generally been one of less robust returns for investors….

From January 2023 through the end of June this year, a period of 42 months, the US stock markets have roughly doubled in value. Put another way, markets have increased in value by over $34 trillion dollars. If you want to do the math, that’s a 1 with 12 zeros following…times 34. A tremendous increase in wealth…

There have been some headline grabbing numbers lately. Scarcity is a powerful condition. The price of a ticket for the Monday Knicks playoff game at Madison Square Garden was $180K to hang with Jerry, Ben, and Timothee on the sidelines, $4K for the cheapest seat in the nosebleed section…for one game! When they lost that game and therefore could not win the title in game four on Wednesday, the prices for that game dropped. Scarcity drives value but that value can be ephemeral…

The more (less?) things change, the more they remain the same. The war with Iran has not been concluded, the stalemate between the sides unresolved . And yet, despite the headwinds of war, and the consequent rising inflation, stock markets continue higher. Companies with positive AI stories don’t just rise, they surge higher. It is an unusually confounding investment environment. I do not have much new to add to what I have written previously. So, instead of reiterating the risks, and the need for caution, let’s stroll along a related, though different, path…

The markets have continued to surprise to the upside, repeatedly setting new records despite all the headwinds from rising interest rates, surging oil prices, and the stalemate with Iran. I am faced with the conundrum of not wanting to repeat myself, yet I feel that the previous cautions and advice still pertain. I will be brief on the markets today and then move on to something related arising from all the market euphoria…

When the markets are mostly higher, as they have been for the last three plus years, I find myself often recommending caution. Yes, Lava Wealth clients have higher cash and money market positions than usual, but they remain mostly invested. Most market analysts are predicting that the market will continue to rise through year end. Still, I feel the need to point out, again, that a rising market creates its own momentum, generating investor overconfidence and complacency when more caution is warranted. Please stay nimble…