Listening to broadcasts of stock market prognosticators and ‘experts’ on the news, talking about structural re-adjustments, weaknesses in the market and the like after dramatic stock market losses is like listening to sports broadcasters in the aftermath of a sports match. They’re filled with wisdom about how and why things happened and what ‘the market’ is thinking, but strangely enough couldn’t say anything about it before the event.
Further, they go on to tell you how this can not recover, it’s disastrous, a bad omen and means another GFC. Panic. Panic. Panic. Yet, markets around the world make dramatic turnarounds the very next day and some dip again at the end of the day. Why? Because it’s the computer-driven algorithms and nanosecond trading that drives what are our biggest gambling casinos in the world: the stock markets. The algorithms are risk-averse and micro-opportunistic, so they sell off in massive cascades and drive the market down. Then, wise investors swoop in and consciously buy up the slack. If I were a betting man, I’d bet that the likes of Warren Buffett are doing very well post-yesterday.
Hedge fund managers and short sellers and their ilk will lose money and make money in the short-term. But if you’re in the market for the long haul – for long-term investment in viable, profitable businesses that actually make a difference and accomplishing something you deem valuable, then you are already winning. Yes, CEOs and Boards of publicly listed companies, I’m looking at you, too.
Don’t listen to the advice of those ‘experts’ who couldn’t even tell you last week that the markets were going to dive on Monday. On the other hand, the advice that is being broadcast about being calm and holding on to your valued stock and taking advantage of some opportunities if you have the means, is sound.
As in all things, there will always be dips and swings up, troughs and peaks, bad times and good times. Be in it for the long haul, not short-term gain.
© 2015 Peter J. McLean. Follow me at petermclean.co.