A friend asked if the China trade war is the only issue that matters anymore to Wall Street. Based on the daily financial news, one might get that impression. It reminds me of a quote by the late Benjamin Graham, who is viewed by many as the father of value investing. He said, “Over the short term the market is a voting machine, but over the long term it’s a weighing machine.” That’s an appropriate quote in our current impeachment drama where people are running about frantically trying to count “votes.” How a congressperson votes will largely be driven by political pressures, focus groups, strategic re-election planning and the daily hype coming from both sides of the question. The short-term outcome of that vote may vary dramatically from the long-term view, as future historians look back with clearer vision and thoughtfully “weigh” the whole matter.
Every day Wall Street investors decide which stocks rise and fall as they vote with their pocketbooks. Such voting is also often clouded by the noise and excitement of the moment. At such times investment choices can be hasty as emotions and even confusion may drive decisions. Over the passing of time the markets will “weigh” stocks more thoughtfully as real value is revealed.
Returning to the example of China, let me share a personal experience. Most know that I write children’s books (under the pen name, Ule B. Wise) and I recently released another book, “The Magic Violin.” When I went to have the book published, I found that printing prices for hard cover books had increased 350% due to the trade war. This made printing the book similar to my last one, cost prohibitive. Rather than give up I decided to use a domestic Print-on-Demand publisher and release the book in what turned out to be a beautiful paperback version. My customers were very happy to have the book in time for Christmas, and it allowed me to keep my book release on schedule.
The trade war affected the way I run my book business, but it did not stop it. Business owners, like myself, find ways to work around problems and keep moving forward. So it is with large Wall Street companies. There is so much noise and frustration over the trade war and some investors run around daily “voting” how they think things will play out, but in the end I don’t think it really matters that much. Businesses will find a way to work around it until it resolves, and then they will find ways to be profitable from the outcome. I believe the foundations for success and further growth continue to exist in our economy and feel Wall Street will continue to reflect that over time.
Wall Street tends to be volatile on a daily basis as millions of investors cast their “votes” on various current events. But overall the markets have continued to climb as long term investors like myself have “weighed” the markets and determined that there continues to be value worth owning.
Hi, I'm Dan. I'm a CFP® Professional.
Securities and advisory services offered through Commonwealth Financial Network®.
Member www.finra.org / www.sipc.org , a Registered Investment Advisor. Wyson Financial, 375 E Riverside Dr, St. George, UT 84790
This communication is strictly intended for individuals residing in the states of AZ,CA,CO,DC,FL,ID,IL,KS,KY,MA,MI,MN,MO,MT,NE,NM,NV,OH,OR,PA,SD,TN,TX,UT,VA,WA,WY. No offers may be made or accepted from any resident outside these states due to various state regulations and registration requirements regarding investment products and services.