Look, youâre going to have to forgive me this afternoon…
Iâm â to use the cricket metaphor â coming in off a long run.
You didn’t listen to them, I hope?
Yes, Iâve got something of a head of steam up.
See, I saw two things on Twitter this morning. Apparently, the US indices â the S&P 500 Index (INDEXSP: .INX) and the NASDAQ-100 Index (NASDAQ: NDX) â are both now up 20% from their recent lows.
The NASDAQ, in particular, is apparently up 33% since late last year.
Why has that got me worked up?
Because knuckleheads (and I use that term deliberately) were telling us, before, during and since those lows, that the market was ‘about to crash’.
There are the ‘permabears’ â those who always think thereâs a crash coming â who whip up fear and panic, driving nervous investors out of the market.
(I can never tell if theyâre just congenital worriers and genuinely believe this rubbish or if theyâre cynically playing on human fear. Either way, itâs bad.)
And there are the traders. The people who, when the market is up on Monday, want to tell you itâs going to crash Tuesday.
Theyâre trying to play silly buggers with the hope of making a few per cent trading the marketâs volatile movements.
Meanwhile?
Meanwhile, if both groups had just invested⦠and waited⦠the returns would have fallen in their laps.
Talk about stealing defeat from the jaws of victory!
No, I didnât forecast it.
I donât do forecasts.
I just invest.
For the long term.
In quality companies.
Please, for the love of god (and the sake of your portfolios), stop listening to market forecasters. And that goes doubly for fear-mongering permabears.
Yes, markets will be volatile.
Sometimes, theyâll fall, and our portfolios will shrink.
Yes, itâd be nice to avoid that.
But⦠we canât. At least not without also missing out on the huge compound gains that have come from just staying invested.
Remember, according to Vanguard, $10,000 turned into $131,000 over 30 years to June 30 last year.
And remember, some people said the market was going to crash last October.
Choose â very, very carefully â who you listen to.
(And next time the market crashes, remember things have always improved.)
Time for a mature conversation
Speaking of fear-mongering, is there anything more fraught than a national conversation about immigration?
Among the goodwill and genuine policy conversations, the topic gives cover for bigots and xenophobes to peddle their bile.
And yet it is a conversation we need to have. It seems pretty likely that the growth in our population is, and for a while at least, will continue to run at a level above our ability to provide increased housing.
And, as Year 8 economics will tell you, when the growth in demand exceeds the growth in supply, prices will continue to rise.
Which⦠adds to inflationary pressures while also risking other adverse consequences.
Now, I am strongly pro-immigration. We should use it to fill skills gaps, and we have a moral responsibility to help refugees.
But we should also manage our population growth (note: not just immigration) deliberately, in keeping with our ability to provide housing, supply infrastructure, and within our environmental limits.
For the absolute avoidance of doubt: I do not care from which country, culture or faith our immigrants come. If they have the right skills and they want to be here, theyâre very welcome as far as Iâm concerned. There is no dog whistle here, and Iâll condemn anyone who tries to use one.
Itâs the overall population growth Iâm talking about here.
Yes, in the short term, population growth boosts gross domestic product (GDP). That gets the cheerleaders out. But we should approach population policy the same way we approach investing â with a long-term perspective.
Thereâs no point growing the pie if the number of people eating that pie grows more quickly. Thatâs the challenge for our policy-makers (and if they abandon the field, as is happening thus far, they leave space for the racists and troublemakers â and that gets ugly very quickly).
And in the meantime, it risks higher rents, higher house prices and higher inflation. Those are pretty ugly economic outcomes.
Quick takes
Overblown: This US debt ceiling thing? Look, predictions â as I mentioned above â are silly. But the odds of this thing ending well are very, very good. Oh sure, the American pollies will engage in some brinkmanship, but itâs unlikely that the end result is a permanent loss.
Underappreciated: Appleâs move into banking is another rattling of an increasingly brittle cage. Our banks are strong. And dominant. But strong and dominant enough to see off the global tech giants? Itâs an open question. Our regulator might stop them. Or their efforts might come to naught of their own accord. But donât assume itâs inevitable.
Fascinating: Did you know that the NASDAQ is now 33% higher than its late 2022 high? Of course you did, assuming you read the top of this article! And yet, thereâs no market excitement yet. When it returns? Well, those who waited for the good news will have missed out on at least a one-third gain. Itâs ever been thus.
Where Iâve been looking: Speaking of technology companies, Xero is back over $100 per share. Others are on the march, too. But I donât think itâs too late to find some beaten-down quality in this sector.
Quote: “The idea that a bell rings to signal when to get into or out of the stock market is simply not credible. After nearly fifty years in this business, I donât know anybody who has done it successfully and consistently. I donât even know anybody who knows anybody who has.” â Jack Bogle
Fool on!
The post Investors 1: ‘Permabear’ forecasters 0 appeared first on The Motley Fool Australia.
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