Why I’m Riding Out The Sequester On Wall Street

Ever since Congress and the President signed off on a two month extension of the so-called Sequester – the round of across the board, completely subjective cuts legislators agreed upon during the debt ceiling negotiation of 2011 – I’ve been hemming and hawing over what to do with my investments. On one hand, I feared losing a great deal of money by keeping my investments in the stock market should lawmakers fail to reach a compromise to avert the Sequester; on the other hand, I wondered just how much the markets would actually react to it.

February 28, 2:26pm

The Dow climbs to 14,145.95, its highest level since October 2007 and just 19 points off its all-time high set that same month.

March 1, 9:40am

The Dow drops to 13,947.00. This would end up being the lowest point in the days immediately leading up to and following the onset of the Sequester.

March 1, 4:30pm

The Dow closes for the day – and the week – at 14,089.66.

March 4, 9:38am

As the markets open on the first full day of trading following the start of the Sequester – still with no legislative compromise in sight – the Dow drops from its Friday close to 14,032.07; this would be the DJIA’s low-point for the day.

March 4, 4:30pm

The Dow surges to end the day, closing at 14,127.82, its highest point since the Sequester began, and less than 40 points off the DJIA’s all-time high.

So between the first full day before the Sequester and the first full trading day after, the Dow only lost just 18.13 – that represents just 0.13% of its value. In other words, it appears that investors – and the market as a whole – hardly blinked in the face of absolute irrationality on the part of our government.

All my hemming and hawing led, ultimately, to inaction on my part, and as the markets closed on March 1st – and the Sequester took effect – my entire portfolio remained exactly where it had been the day, week, and month before… both figuratively and literally.

Did you make any changes to your investment portfolio before the Sequester?

Leave a reply