We seem to be living through a washout of the market this week, as fears of inflation and Fed-spiked recession take out all of the speculative excess of the past two years… which is, really, the point of having the Federal Reserve manage interest rates, so they can raise them at times when the economy is overheated, slowing down the animal spirits that help drive inflation.

Inflation is the state we get when there’s too much demand for too few goods and services, driving prices higher… and the Fed, if it slows down the economy by increasing the cost of borrowing for people and corporations, can cut that demand. Sometimes that causes a recession — as investors know intuitively, the Fed is made up of people, and people almost always overshoot at either extreme. The stock market is just the collective measure of what millions of people think, and it works well at usually finding the “right” valuation for companies over the long term, eventually, but it often takes some wild swings in prices to average out to “right” (Efficient Market Theory is bonkers in the context of any one stock on any one day… but the market as a whole usually averages out to being pretty efficient over time). That’s human nature, we overshoot both ways, as we’re quietly looking at everyone else to see what they’re doing because we’re afraid of being the one who drifts away from the herd and gets eaten by a lion, and the Federal Reserve is not so different, they just mask their humanity in spreadsheets and models.

So when it comes to stock prices these days, mostly they’re moving in perfect unison — when we get excited that the Fed will avert a catastrophe, like today, we buy… when we panic about the Fed driving rates high faster and pushing us into a recession, we sell. And we don’t think much about one company’s prospects over another’s on the days when the herd is changing direction, we just follow — either the screen is all green, or it’s all red. That gives us some opportunity to buy the stocks that we think are better than the rest, but, of course, straying from the herd is scary.

And the uncertainty is not going to go away anytime soon. The challenge, sadly, is that while we all watch the Federal ...