Navigating the Noise of Current Events
Between IPOs, a new Fed Chair and operating regime, geopolitics, the chip rally, and a surprisingly strong jobs report in the face of an AI workplace revolution, I have wracked my brain trying to write something digestible and actionable for all of us as investors. For context, I am on my third day of trying to write my first paragraph of what could potentially be conveyed as actionable information given the latest developments in capital markets.
That should tell you all you need to know.
Sticking to Your Long-Term Strategy
The takeaway here is that none of these events suggest that you should deviate from your long-term strategic investment plan. Yes, they can be fun to talk about, and in some cases, they may influence how we manage the smaller satellite positions in your portfolio, but they do not change the way we invest on a long-term basis.
For context, if we advised you to change your 10-year outlook on how much of your portfolio is invested in stocks because SpaceX went public, a peace deal was signed with Iran, or because Google offered additional stock at a 4% discount, you would look at us like we had five heads. Where this potentially has some relevance is simply on the edges. Maybe the recent chip rally gives some justification for taking additional profits, but we probably are not going to sell the whole position just because it has done exceptionally well lately and CNBC spends half an hour on “Time to Sell Semis?”
American Innovation and the Premium of Patience
I believe we are in a time of extraordinary technological advancement across the world, but particularly in the United States. The beautiful thing about the U.S. is not just the number of talented entrepreneurs that we have, it is the fact that we have so many people here that are willing to back those ideas with their own capital, and tag along for the successes and failures alike. In that kind of environment, which has only grown in scale over the last 20 years, I cannot imagine being anything but optimistic.
Of course, you should always be prepared for day-to-day volatility from headlines. The greatest virtue that a long-term investor can possess is tolerance for day-to-day noise. Tolerant investors have historically been better positioned to participate in long-term market growth by living with the noise and chaos (eventually tuning it out), while investors who react to short-term volatility may face the difficult challenge of determining when and how to re-enter the market. Both can make money, but I believe the patient and tolerant investor will often have a clearer framework for making decisions through changing market environments.
“Investing involves risk, including possible loss of principal.”