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)