In a word: “Nutty.”

That’s the markets right now.

And when things are nutty short-term panic usually ensues, which, for long term investors means: “Opportunity.”

That’s because time is always the first victim of short-term perspectives. It vanishes into the back seat when panic takes the wheel.

Just for the record - I think it more than sucks to watch values fall and gains go away in the near-term.  It’s never easy watching the fluctuations in the zeal of overworked emotions.

But it’s also part of the deal to secure the gains waiting ahead.

If you can muster it, think like Warren Buffett right now. Do you think he’s selling his positions?

Is he hell!

Fear has always been and will always be your largest expense over a lifetime of investing.

Let's Check a Couple Items

The "fear of the minute" media hype is very real because it’s lucrative. It grabs eyeballs which in turn sells copies and adverts. That’s the game.

But what about the market facts versus the media’s version of reality?

New hires in December (US) with the backdrop of so-called experts telling us "the global economy was going into a recession" looked like this:

Panic Chat1

Looks a bit odd for an economy that’s supposedly falling off a cliff, eh?

And does anyone remember what we were being told last year at about this time?

We were on the brink of tax cuts, repatriation and higher earnings and were told interest rates would choke us, inflation would rear its ugly head, the dollar was toast and it was best if you invested in emerging markets rather than this ugly old, squeaky $21 Trillion economy in the US.

After a year of huffing and puffing about higher rates we have the 10-year about 8 basis points higher than it was in Q4 of 2017! 

That's 8 basis points friends.

Panic Chat2

Now, there are a couple of things you might want to note about the chart above:

  • There is sheer terror rolling through the investor ranks again
  • The fear is palpable, and rates, which were the bogeyman all last year, are back to where we started. And the world was not ending then either
  • Check the rates for Germany - 16 basis points! Crisis levels?
  • A Japan is posting negative rates again!

No pain no gain, folks. But if you can’t take the heat get out of the kitchen. If you want to build real wealthy this is what you need to be prepared for. And most folks aren’t.

The winners are the ones who don't panic even when it’s very painful short-term.

Mike Williams
Founder and Managing Partner of Genesis Asset Management, New York