It’s not quite as exciting as the work of a fighter pilot, but we do see some similarities.
When asked what flying a fighter jet from an aircraft carrier was like, Capt. Korey Watkins, a navy pilot once said, “It’s 60 seconds of excitement followed by hours of sheer boredom.” What she was referring to was the typical Combat Air Patrol or “CAP” flight plan which starts with them being launched by a giant steam catapult under the deck that launches their plane up to about 170 mph to get airborne an up to a safe altitude. Then they fly a prescribed pattern over the area to be monitored for several hours to protect the ship from threats.
As financial advisors who closely monitor and respond to the financial markets for our clients, our timeframes may be a bit longer but in some ways we can identify with her statement. This past August was a good example. Over the course of only 10 days, the relative strength indicators for the S&P 500 went from being significantly stronger than fixed income (bonds) and cash for more than a year and a half, to the exact opposite with fixed income ending up on top, cash being in the middle and the S&P 500 below both of them. In our world, those 10 days definitely count as our 60 seconds of excitement. It has now been more than 6 weeks and all three asset classes have essentially held those relative positions with only small sideways movements. Like flying “CAP”, we are in currently in monitor mode – watching closely for indicators of significant change.
The next bit of excitement will come when this sideways trend moves up or down. We will either see that a bottom may have formed and the S&P 500’s ranking will be on track to once again exceed that of fixed income and cash; or, the current spread will continue to widen, indicating that the correction is not over. Until then we stay vigilant, monitor, look for threats or opportunities and make a move when the time is right based on the information we have. Our job is nowhere near as dangerous as Capt. Watkins, but when it comes to our client’s assets we take it just a seriously.