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Higgins Capital Management, Inc.

Cracks Appearing, Independent Thinking

The Economy: Holiday Cheer is the global focus. Beaches are packed; Apres Ski at the forefront. The folderol of money and investing is something to think about tomorrow if at all. This week the Fed met and hiked interest rates another 1/4%. Fed Chairman Powell ignored White House pressure to the contrary. Financial markets sold off on the news. To add insult to injury, Powell insisted that shrinking the balance sheet would continue regardless of the blood in the streets. The narrative has changed from universal conviction that stocks were going to go up forever. There is now the beginning of a perception that stocks could actually go down. Think "The Limbo" and how low can you go? Likewise real estate. Cracks are appearing in the go-up-forever narrative. The fundamental issue is that humanity is programmed to project the immediate past into the future. Assets have gone up for almost 10-years. So that trend should continue forever … and if not, you have all the time you want to change course. Right? The idea that you should simply get out of stocks or bonds is not even on the horizon for most. Hence waking up to find your 401k is now a 201k. To highlight the New Normal, David Tepper stated that "The Fed Put is dead." We'll see.

Food for Thought: Holidays give us time for reflection. If you're reading this you're at the very apex of the global economic pyramid. The stratosphere. It's a long way down from here. So consider: You're where you are because of some independent thinking. The willingness to go against conventional wisdom. Do so now. Investors are being advised to sit tight and ride-out this market downdraft. But it's your money and they're your accounts. Just like your health, you not your advisor, have the ultimate responsibility for how your investments are performing. Now is the time for the independent thinking that has gotten you where you are. For the past year, I have emphasized the need to have a plan, an exit strategy and a dollar value of the losses you are willing to take. If your advisor isn't pushing you to evaluate an exit strategy, you need to contact me. Being prepared is the foundation of optimism. Have a great Holiday; well see you on January 9, 2019. Let's make some money together in 2019.