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We find ourselves in the midst of a government shutdown its the first one in
seventeen years
Question of course is what does that mean? What does that mean for the markets at large?
What does it mean for your Pinnacle portfolio?
Thats what we are here to address in this video
Believe it or not
It doesn't seem to mean a whole lot, at least not historically
We look back at the cases in history. There have been about seventeen times
that the government couldn't come
to a budget, get one past. In fact, Since 1981 there has actually been eleven
cases where the government has been shut down
because there's been no budget.
What has that mean for the markets?
Well actually you'd be surprised to know
that during those eleven cases the average loss for the market during
government shutdowns was between 0&1 percent.
That's on the S&P 500 Index. If you actually just give it a little bit
time, look a month out. Actually the returns are kind of surprising to you got about 2 to 3
percent return on
average to the positive in markets just one month out.
So I think the history that we're looking at would suggest that
generally speaking these government shutdowns are a non event.
Just because we don't think there are typically a big market reactions
government shutdown that doesn't mean there are no risks
In this case there are clearly risks for us to monitor. First risk is just how long is
this government shutdown last
We expected to be temporary if it's not and if extends
that could leak into the economy and it could leak into the markets. We will have to watch
that
Number two there's also a debt-ceiling debate that we have to watch.
The debt ceiling should be hit somewhere the middle of October
the debt ceiling carries much bigger implications for the full faith and
credit of the United States
so there clearly risks here that we're gonna have to monitor
we expect that there will be plenty of negative news flow on the government
shut down the days to come
however as we stated we are not at this time
positioning the portfolio in a defensive manner because a history that we talk
about
we think for the most part this is a non-event so we'll continued to ride the
portfolios at neutral volatility at the moment
will also continue to rotate portfolios sectors industries countries
that's the way will continue to try to add value to your portfolio at this time