Market Education

How does a long-term investor keep perspective in a world that is driven so significantly by short-term events? This question has taken on added importance with the recent events in the world financial markets. As I write this, however, I am thinking about more than just the recent events. I’m thinking about the “crises” we’ve seen before, and the ones we are sure to see in the future. I was driving my thirty minute commute to work last week on a day after more bad economic news came out about jobs and loss of national equity. It was interesting to observe the world without the filter of CNBC, CNN or Fox News telling me how I should feel. I know this runs the risk of sounding overly simplistic, but it was a refreshing experience to be unplugged and to see the world through my eyes rather than a media filter.

Construction workers were busily working at constuction sites

The streets I traverse daily on my commute were being torn up by large work crews ready to lay new asphalt.

The Starbucks line was just as long as normal when I arrived to order my tall drip coffee.

Cars scurried into parking garages as attorneys, CPAs, insurance brokers, and dentists all went to work.

In other words, life was still moving in a normal fashion as people went about their lives. I am not being Pollyanna or naïve towards this crisis – just attempting to untangle the “real” crisis and problem from the one that is spun through the numerous communication mediums and talking heads. As a way to bring clarity to the situation, let me offer the following three suggestions: