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Investment Headlines: Beware Long-Term Investing
Have you really looked at some of those headlines in the financial papers? The other day while perusing a very well-known national business and financial weekly, we could not help but to notice some of the headlines on the articles. One in particular caught our attention. It was titled, “Stocks Rally 2% on Week, Helped by Banks.”
It was a catchy title. But, after thinking about it, what’s an upward swing of 2% in the stock market, especially in just a short period of only one week. That’s only five days. And if you think about it in terms of hours – the market is open from 9:30 to 4:00 each day. So, 6.5 hours times five days are 32.5 hours. What is that amount of time in relation to a year? Now let’s assume we have only two hundred and sixty trading days. Really it is less if you consider Holidays. If you take the 260 days times 6.5 hours, you’ll get 1,690 hours for an entire year.
Next, let’s take the 32.5 hours (for our one week) and divide it by the 1,690 hours (for the year). You’ll get a whopping 1.23% glimpse in time of the US stock market. That’s 1.23% out of 100%. And remember that is just for only 12 months. For long-term investors that follow Ben Graham’s philosophies, most value investors would find the entire concept to say the least a waste of a serious investor’s time. Therefore, for us, we did not even read the article. Admittedly, we are contrarian investors, so we’re sure thousands of people did in fact read the article and found it interesting. And most likely some individuals ran out and bought some stocks based on it. Please don’t get us wrong. We’re not trying to put down the article. Especially, since we didn’t even read it.
Our point is to remind the retail investor that investing requires a long-term focus if you want to make above average returns and you are better severed not following the masses. I recall a fitting quote by Sir John Templeton, (stock investor, businessman, author and philanthropist), “It is impossible to produce a superior performance unless you do something different from the majority.” Many of our readers ask how to separate the noise in the market from the really meaningful information. Hopefully this helps in part to address that question. In simple terms, we recommend you stop and think about the particular information at hand. To play it safe, initially assume it is noise until proven otherwise. And ask yourself if it is logical, or if it makes any real sense. Also, we suggest that you conduct research and see if you can find additional resources that support the information that you are questioning. Try to verify it using many different sources. In general, most information, like the article mentioned above is not what we call “actionable” information.
We have disclosed some specific investment opportunities using the above strategies to our subscribers in our PWC STOCK REPORTSSM subscription service. They have access to our security analysis pointing to undervalued companies with above-average returns over the long-term.
At Port Wren Capital, LLC, we specialize in picking specific undervalued U.S. stocks using fundamental analysis developed by Benjamin Graham using a five step process. We have beaten the S&P500, DJIA and NASDAQ benchmarks since we started 5 years ago on our own investments. Discover the difference for yourself. To learn more contact us today.
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