The futures are projecting a rather significant market pull back this morning. With this in mind I asked AI what the expected duration of the pull back would be. The following is my question and AI’s response. The suggested 1 to 2 month during of market reactions offer sufficient time to make meaningful adjustments. Personally, I am taking this opportunity to go to a higher cash position.
Gray
My question to AI.
WHAT IS THE PROJECTED TIMING FOR THE MARKETS TO RECOVER FROM MOODY’S RATING DOWNGRADE FOR THE US
AI said:
The market’s recovery timeline following Moody’s downgrade of the U.S. credit rating from Aaa to Aa1 on May 16, 2025, is uncertain and depends on various factors, including investor sentiment, fiscal policy responses, and broader economic conditions.
Historical Context:
In August 2011, after Standard & Poor’s downgraded the U.S. credit rating, the S&P 500 index dropped approximately 10% over the next 41 trading days but rebounded with a 36% gain within a year.
Similarly, following Fitch’s downgrade in August 2023, the S&P 500 declined about 10% over 58 trading days, then recovered with a 37% increase over the subsequent 12 months.
These instances suggest that while downgrades can lead to short-term market volatility, they don’t necessarily result in prolonged downturns.
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To my understanding, and how I invest since finding Sauldom, this is information that only impacts things like ETF’s, indexes, or other very diversified types of holdings.
The credit downgrade can/could make things harder for some companies to get credit, and it really does make us look bad…
…but if you have a strong company, with growing customers, with growing revenue, with strong products, with good innovation…
… I do not see how this should even figure into your planning.
Most of what I am reading in the OP is more related to macro and to market timing instead of focusing on your fewest/best stocks and making decisions based on…are they growing, or are they not. Market timing is definitely not a part of investing theory here. Now, if you have a strong company AND you get a chance to buy a bit more because of an ‘emotional’ response from Wall Street, great. But going to cash after the damage is done is shooting yourself in the foot, and also leads to the bad results of market timing.
As for using AI to tell you how to invest, not touching that with a ten foot pole and I have NO confidence in anything that come out of AI. And, specifically when people ask AI to speculate on something. Grok in particular is proving that the results can be as biased as EVER given current news there…
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The primary purpose of Saul’s board is to discuss individual stocks. Macro events are beyond the control of investors. Portfolio management due to macro events is also OT. If you wish to discuss how the rating downgrade might impact a specific holding this discussion might be marginally on topic.
General observations about macro events is entirely OT.
Please do not provide additional comments to this thread.
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I accept the criticism of the objective of my post and will attempt to be more compliant with the community guidelines.
Gray
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