I was out of the office yesterday – did I (heh heh) miss anything?
US markets took a 1-2% shellacking, we have a new Fed Chair nominee, a new iPad event is scheduled for 10/22, and political situation in DC remains an embarrassing mess.
And my surprising takeaway about this is that very little of this matters very much, and none of it matters a great deal. That was what I gleaned from a number of very interesting, very knowledgeable speakers and panelists at our conference yesterday. I will eventually post some thoughts on what I took away from the day’s events, but suffice it to say there was wisdom aplenty to be learned.
For now, I would suggest that investors turn down the noise and focus on the signals that actually do matter:
1. Valuation: How are stocks valued? Are they cheap or are they expensive? (Keeping in mind that cheap stocks can get MUCH cheaper, and expensive stocks can get MUCH dearer).
2. Trend: What is the economy doing in sum? Is it expanding or contracting? What is the market doing — rising, falling or range-bound?
3. Inflation: What is the overall trend in inflation? Are prices rising or falling or stable — and how rapidly?
4. Earnings: Are companies able to grow their top and bottom lines?
5. Credit: What is the cost and availability of credit?
There are lots of other elements we can talk about — but if you understand these five things and get them more or less correct, you are ahead of 90% of your fellow investors.
Lose the News (June 2005)
Who Do You Trust? (January 2008)
The Price of Paying Attention (November 2012)
Avoid the Noise (January 2013)
Things I Don’t Care About (January 15th, 2013)
What Do You Control? (May 30th, 2013)
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.