Why investors waste time in analysing too much on short term events

 

Why investors waste time in analysing too much on short term events

I have been reading, hearing, watching last some days everyone talking, discussing short term events particularly arising due to tariff war. Most expert have given either negative view or created more confusion in the mind of investors. Everyone on a daily basis thinking and talking of what’s next? This is not an isolated incident but has happened many times in past but may be for different reasons.

When we all know that short term is risky i.e. uncertain, equity investment gets impacted most and we do not invest our money in equity if required in short term, then why waste too much time on short term analysis.

Only 2 issues to consider (1) how long can this short-term uncertainty be (2) what will be the fate of my money in long-term.

These two words, short-term and long-term themselves give a clarity. Short term can be said up till X (months or year) whereas long term can be said as beyond X (months or years). Sometimes one can have a guess about this and sometimes may be not. But one thing is for sure, this X will come some day and it is not an eternity.

Coming back to this USA tariff case I always held a view (1) Trump government is for maximum 4 years. As per USA law there is no 3^rd term for same person (2) If negative atmosphere or confusion is deliberately maintained by that government either there will be resistance both from domestic quarter and/or from external economies (People do not want to remain in and situation for long) and that will have some impact (3) People/Economies will find an alternative way to counter the negative impact and force turnaround. So, this X has a duration and there is every reason to believe the impact is not forever.

Answering to 2^nd issue irrespective of any situation everyone desires growth. Growth is the essence of our lives. If we go by generations by generations or past decades by decades it is evident that in long term growth has happened and in future also will certainly happen (just compare our aspiration for better lifestyle with our next generation, we will get the answer).

My advice to investor is, don’t read too much of analysis. Experts will talk something different else how they will be called expert. Just think and act like a common man, using your common sense and invest. Investment in equity is all about taking advantage of long-term positive opportunity and when required protecting from short term negative impacts. So, if long term looks excellent whey to worry present short term. Yes, do take corrective action when your investment horizon is coming to its end i.e. protect short term risk when redeeming.