Strategies To Tune Out Noise And Focus On Long-Term Goals

One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity. -Bruce Lee

Every now and then I get together with some friends in the finance world and during a recent meeting one of them seemed overly preoccupied with world events and how he perceived them to be having a potentially significant impact on his portfolio. As I sat and listed I couldn't help but thinking back to Benjamin Graham's classic quote that:

The investor's chief problem - and even his worst enemy - is likely to be himself.

My friend (who works in the asset management business) was contemplating going to cash because of:

  1. Worries about the Chinese economy and its stock market run up
  2. Grexit fears
  3. Brexit fears
  4. US first quarter GDP weakness
  5. Anemic wage growth in the United States
  6. A pullback in 10 year Treasury yields
  7. What the Fed is going to do with rates
  8. Severe underperformance in the transportation index vs. the overall market
  9. Crude oil price volatility
  10. Inconsistent growth in Europe
  11. A flat lining Japanese economy
  12. Unrest in the Middle East

I may have forgotten a few, but I admit to having tuned out in the face of an endless barrage of fear and worry. What he wanted to know was my read on these issues. What way did I expect them to move the market in the short to medium term? Well my answer was: who knows? At the end of the day not even the most esteemed and experienced economists in the world were able to predict the Great meltdown we had in 2008-2009 which took stocks down 50% in just a few months.

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