I have been reading a collection of investment articles that were written back in the early 1990s. Here’s the gist of those articles. The bull market had gone on for about 10+ years to that point. The markets were coming off of a five-year span of ‘unprecedented volatility’ as was noted a few times. There were negative reports everywhere about the economy and how things were stalling out. People eagerly expressed the reasons the market was overvalued and why the bull market had to come to an end (which of course it didn’t for many more years). In short, there were a million reasons to be pessimistic about where the market was headed at the time. Is any of this sounding familiar to you?
The headlines from the early ’90s were one pandemic short of being a reflection in the mirror of where we are today.
Yet, here we are. Over the ensuing decades, the long-term investor has benefited from the great companies that have gone on to increase market share, increase earnings, and by extension increase dividends and the wealth of their investors.
The experience of reading old articles where they are referencing the issues of the day made me realize how utterly irrelevant the headlines from decades past are with regard to where we stand today. Yet, we mistakenly believe that the stories and headlines we are consuming today are critically important. If today’s stories will become footnotes tomorrow, are they even actually relevant today?! That’s a serious question.
In all likelihood, they aren’t because headlines ignore larger trends. Want proof?
Think of the biggest market stories over the past few decades, Government Shutdowns, Taper Tantrum, the Great Recession, the Tech Bust, Desert Storm, the Crash of ’87, and the Oil Embargo. Those were huge stories at the time. My intent is not to minimize any of those experiences, but to remind you that those stories, as hugely important as they were when they were happening, are footnotes in market history now.
Given enough time, why would today’s headlines be any more relevant than the stories from 30 years ago are today? Today’s headlines are today’s problems. Tomorrow we will have moved on and we’ll be on to new problems and new headlines. Until those become footnotes.
What is likely to happen over the coming decades? Earnings from great companies will likely increase as we add more and more consumers to our already insatiable desires. It seems relatively clear to me and it seems smarter to focus on those larger trends rather than the headlines of the moment.
For me, reading these old articles offered a perspective that I’m not sure I could have gotten any other way. It offered the reminder that today’s headlines are tomorrow’s footnotes. If we keep that thought in mind, I think we’ll all make better decisions around what is daily broadcast as the end of the world as we know it.
Stay the Course,
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