Fisher Investments Editorial Staff
Others

One of Those Days

By, 11/17/2010

Story Highlights:

  • Whether it's Chinese growth or Irish debt troubles, new developments in old stories can knock markets.
  • But it's the really big, heavy stuff that matters in the long run.
  • What seems big and weighty in the thick of it often looks smaller in hindsight.
  • So far this year, the seemingly biggest risks have diminished over time—a trend we think likely to continue.

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Tuesday was one of those days. A number of significant stories broke, markets tanked, and there was no knowing exactly which news was most influential. When asked what the market would do that day, JP Morgan once said, "It will fluctuate, young man. It will fluctuate." Great investors know this of stocks. They are fickle and regularly fool the uninitiated in the short term. 

Whether it's Chinese growth or Irish debt troubles—new developments in old stories can temporarily knock markets. But it's the really big, heavy stuff that matters in the long run. And what seems big and weighty in the thick of it often looks smaller in hindsight. It's harder to tip the global scales than one might think. Investors need to carefully adjust the weight they assign risks, taking particular care to observe their own emotions in the process.

None of this year's recurring risks seem capable of overturning the bull. Maybe China slows (and that's no certainty—folks have worried about it all year to no avail), but Emerging Markets as a whole (a group bigger than just China) continues to roll. Or, who's to say the developed world can't pick up the pace? No one seems to think that's possible, but developed economies aren't as beleaguered as televised—and sometimes widespread disbelief is a decent reason to believe.

Maybe the euro crisis continues until Portugal, Ireland, and Spain have tapped bailout funds and shun markets for a couple years. But isn't that what the funds are there for? (Not including Italy, which is less likely to need help, the bailout covers the PIIGS for three years.) What happens next is a question too far down the road to answer. It could be the euro crumbles eventually, and that would be a significant market negative. But there are too many "ifs" between now and then, and the bull can continue in the interim.  

We strive to keep our finger on the pulse, regularly reviewing market drivers. If it seems our conclusions are often the same, it's not because we're not looking at the risks—it's because we haven't found any not already widely known and capable of tipping the scales. Throughout 2010's (often) repeating worries, stocks have overcome two corrections and are positive for the year. That tells us the big stuff in the moment was smaller than it seemed looking back—a tendency we think likely to continue.

*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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