Minuk's Musing and Playing the Long Game
Richard Minuk - Nov 18, 2022
Why are markets so volatile in the short-term?
Economies tend to be a little volatile. Maybe growing at +1%, +2%, +3% sometimes -1%.
Company profits tend to be a little more volatile because they are leveraged.
And then there are the stocks of companies, and they tend to be even more volatile up and down.
The reason is that short-term market prices are driven up and down by people and their emotions.
Therefore, to predict short-term market swings, you would need to predict human nature and that is a near impossible task to do accurately and consistently.
The good news is that all available evidence, I mean every single shred of data we have, tells us that you get paid handsomely to ignore short term volatility.
If you have time before needing your money back, and can ignore the short-term noise, your odds of making money are astronomically high when buying and holding a broad range of high-quality businesses.
| Nov 28th 2022 | Year to Date | 5-year | 40-year (Nov 18 1982) |
| S&P 500 Index | -17.8% | 51.52% | 2,777.73% |
Google Finance
…and that isn’t even including reinvested dividends.
Have a great weekend,
Richard
Richard Minuk, CFA
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