by Karl Schroeder for Finance
We have been getting a little short-term focused in recent missives. We apologize for this short-coming. We really need to think and act long-term all of the time. What does it mean to think and act long-term? Well, not everyone has the same idea about that, but here is ours: don’t worry about the short-term outlook, worry about meeting long-term goals. No one is going to meet their long-term goals by sitting in cash, especially at 0.10% yields. Very few people are going to meet their long-term goals by buying bonds with coupons of 3%, especially when you have to pay a premium to get them. The math just doesn’t work that way. The only way for anyone with a long-term return requirement of 6% or 7% is going to meet that goal is by owning stocks, real estate and commodities most of the time.
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by Karl Schroeder for Finance
We hope your Holiday weekend was a good one.
With the general negative sentiment and outlook surrounding the world markets over the past several weeks and months, we have to wonder how many “sellers” remain. If we go back to the basic underpinnings of what a market represents-a structure for exchange, dictated by constantly-changing supply and demand-what else would need to be “priced in” for more shares in various companies to be sold? That’s correct, companies with value and individual merits, as opposed to just index numbers. We have a tendency to forget this relationship as well as the one that strong pessimism and market troughs on a graph tend to appear together. The centuries-old “buy when you see blood in the streets” adage has been effective, although it doesn’t feel so positive at the time.
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