On the Money
A constant flow of negative news is undermining long-held faith in strategic investment, writes ALAN STEEL
I felt it only right to share an obituary that has come to my attention…
Long-Term Thinking 1800-2020
Long-Term Thinking died last week. His last true friends, Warren Buffett, Charlie Munger and Peter Lynch, were by his bed side. He was only 220.
He lived a good life since the Industrial Revolution, when for the first time people could think about more than their next meal.
But the rise of 24/7 Bad News and Anti-Social media plus a widespread obsession with abject pessimism chipped away at his mental health, especially since March.
The final blow came last month when a young enthusiastic gloom merchant on a Business Coronavirus Special warned that a 10% US Stockmarket pullback which has occurred on average every 11 months over the last 100 years, could be devastating for investors, as it coincided with a Presidential Election which occurs every four years.
“That’s it,” Long-Term croaked from his hospital bed, “there’s no room for me anymore in this asylum”. He died soon after a 19 year old Youtube Bitcoin trader published his daily tally of how much the net worth of world billionaires had changed in the previous 12 hours.
He had endured the Great Depression, Poverty, World Wars, rampant inflation, high taxes and huge Interest rate spikes in the 1970s and 1980s, but the last four years of wall-to-wall bad news, despite positive returns for long term investors, proved too much.
‘Years have become months, months have become days, days have become seconds and seconds have become careers made on smartphone trading apps’
A mere 50 years ago, according to statistics, the average share was held for over eight years. Now the average Tesla share is held for an average of 10 days, And the market value of Tesla which has never made a profit, is greater than the market value of all US, European and Japanese car makers combined.
“Our culture has an endemic problem of short-term thinking,” he said in his final speech in August. “Years have become months, months have become days, days have become seconds and seconds have become careers made on smartphone trading apps. You’re only judged now on the short-term.”
A few sensible experienced investors mourn his passing, said a Scotland-based fund manager who prefers to remain anonymous rather than be trolled by instant know-alls on Twitter.
“It’s sad to see him go like this. Everyone in our business knew he was right. With our own money we look years ahead at quality and themes, but with the media and thus clients, at most I have three months to be deemed correct or I’m out a job.
“With pension funds for example we have a time horizon of decades but we’re judged how we perform against others, or false indices every 30 days. And financial regulators who wouldn’t know the difference between a risk and a reward if it jumped out of their soup at them, increasingly come up with obtuse rules, while investors are increasingly ripped-off by charlatans.”
Rather than send flowers, Long-Term’s family request, that as a mark of respect, we turn off News channels and switch off our smartphones, so that we can stop checking share prices and currency movements every five minutes to ease our stress levels for a day.
Long-Term’s step-brother Common Sense has asked me to pass a message to investors, “that whatever is reported as ‘going wrong’ in the News right now, will in all probability be long forgotten over the next five years, as unreported good news delivers positive results to the patient and the optimistic, as has been the case for at least the last 100 years.” Amen
“We will now sing, as requested by Long-Term, a song written this year by a favourite songwriter of his, Lucinda Williams: ‘Bad News Blues’
“Bad news on my TV screen
Bad news on the magazine
Bad news on the newspaper
Bad news on the elevator
Bad news on the street
Bad news in my car
Bad news under my feet
Bad news at the bar
Bad news on my left
Bad news on my right
Bad news in the morning
Bad news at night…
In my ‘fridgerator
Bad news on my sink
Bad news in my drink