A walk in the park

The legendary US-based investor, Bill Miller, provided a list of worries in his latest 2021 third-quarter letter: “Today’s worries include, but are not limited to, China’s regulatory actions, high and rising fuel and food prices, labor shortages, inflation or stagflation, the effect of Federal Reserve tapering, disrupted supply chains, potential default due the debt limit standoff and the ongoing dis-function and polarization in Washington.”

What should investors be worrying about now?

A walk in the park :  There was once a lady who liked to walk her young dog each morning using a very long leash. Her dog was always easily excitable. It would dart all over the place. You could never guess where the dog would be from one minute to the next. But over the course of the two hour stroll, you can be certain that the dog is heading east at five kilometers per hour. What’s interesting here is that almost nobody is watching the lady. Instead, their eyes are fixed on the dog. If you missed the analogy, the dog represents stock prices while the lady represents the stocks’ underlying businesses.

Optimism: There are 7.9 billion people in the world today who will wake up every morning wanting to improve the world and our own lot in life – this is ultimately what fuels the global economy and financial markets. This is the lady, walking steadfastly ahead, holding her dog on a long leash. And this is ultimately what investors should be watching.

Source: The Good Investors

Asset Multiplier Comments: –

As minority shareholders, we participate without any control or influence on the operations of a company. We trust the management to adjust the business depending on the headwinds or tailwinds that they face. What we need to focus on is on identifying businesses which have great products or services, guarantee longevity of profits and sustainable growth, and have the ability to withstand shocks and cyclical downturns. Stocks prices may be volatile for any number of reasons. Investors should tune this noise out and focus on movement of the business as seen in quarterly results. Performance of the business will eventually be the driver of share price.