Geoff Wilson is a man who turned a half million-dollar business investment into a $500 million fortune over 30 years.
We can assume he knows a bit about the investment world!
What is the ‘one’ thing he suggests you do when markets are down, the outlook ugly and everyone is quaking at their knees?
This week The Australian quoted him as saying…
‘ “I’d seen instances previously, whether it’s the 1987 crash or various other times where money would flow out of markets.
‘“And that’s when you want to be buying. When people are withdrawing their money, that’s when you want to be invested,” he says.’
In other words, go shopping, of course!
If only it were that easy. It just feels so wrong to step against the herd.
The human brain is from the Stone Age. It wants safety more than anything else.
Now’s your chance to overcome your brain, and think of your future self (and family).
You don’t think of today. You think of 2024 or 2025 — or even further out.
Right now, everyone is preoccupied with the yield on long-term government bonds marching up.
There are two things we can say about this.
One is that interest rates, historically, follow growth. If rates are rising, growth is strong.
That can’t be anything but a good thing over the medium term.
The second is that nobody — and I mean nobody — has any prescient track record predicting interest rates.
Economist Robert Shiller makes this point in his book Narrative Economics.
While rising rates might be giving everyone a headache now, who’s to say we won’t have completely forgotten about it in 12 months?
It was only six months ago we were all in a squirm about the regional US banks that collapsed.
Now, tell me…when was the last time you thought about Silicon Valley Bank?
The market’s volatility — to the downside — makes everything seem very urgent in the now.
I’m currently reading a book. A very successful music producer called Rick Rubin wrote it.
In part, it’s a mediation on creating art, and the ingredients you need to transcend your own inhibitions.
But there are quotes and themes that speak to the business of creating wealth too.
What we need, in large doses, is patience and perspective.
Yes — the market is selling down. That’s what stock markets do. It goes with the territory.
What if we think about it like Rubin suggests, instead?
‘When we obsessively focus on these events, they appear catastrophic.
‘But they’re just a small aspect of a larger life, and the further you zoom back, the smaller each experience becomes.
‘Zoom in and obsess. Zoom out and observe. We get to choose.’
I have been writing about markets for over a decade.
I can give you an endless list of macro concerns that washed through the market with acute urgency over the years. I expect I’ll see many more.
But none of these stopped, not topped Apple from marching to a $3 trillion company. Or prevented Elon Musk from becoming the richest man in the world.
Admittedly, these two examples are extreme. But the principle, I think, is a good one.
The current market environment is a chance to accumulate stocks that you like for the long term.
It may be, for example, that debt yields have little to no bearing on its business.
It may be, conversely, that higher interest rates are a benefit to the business.
We can only know by understanding each individual business — which, by the way, is about the only thing you can control in the market.
Uranium, for example, currently has the eye of the market. And for good reason.
There’s every chance that the industry is going to see too much demand relative to immediate available supply.
Perhaps you missed the recent run in these stocks. Well, the market is knocking them down right now.
Government debt yields will hold little bearing over the uranium market over the next five years.
It’s either going into a bull run, or it is not. Yields don’t factor into it.
My take is that the uranium bull is here to stay.
And if we go back to the 1970s, we can say that commodities generally went on a massive bull run despite inflation, economic weakness and high interest rates.
Now, are you learning about uranium…or focusing on an issue nobody can predict?
I know what I’m doing.
Editor, Money Morning