A couple of years ago, Jason Zweig, the long time writer of the “Intelligent Investor” column in The Wall Street Journal wrote, “I was once asked, at a journalism conference, how I defined my job. I said: My job is to write the exact same thing between 50 and 100 times a year in such a way that neither my editors nor my readers will ever think I am repeating myself.”
I think everyone who writes about investments would recognise the feeling — I certainly do. This problem is particularly acute in times like the present one. Equity markets are falling almost daily. Investors are panicking and every time they turn to read or hear anything about investments, they are looking for advice on what to do now. That’s NOW, distinct from other times.
The problem is that if the advice is to be good, correct, and useful, then it can’t be different and distinct. It must be a dull repetition of everything that one has said before. However, investors are not looking for good advice. They are looking for advice that sounds like good advice. They are looking for things to do, with an emphasis on ‘do’. Much of the media and the Internet are full of such advice. Sell these stocks, hold those, take on a defensive posture.
The problem with all this is that it’s designed to compensate for what’s happening now, over the last few weeks or at most months. That’s the immediate time frame over which investors’ emotions work. However, you will make or not make money based on trends that last for years, or even decades. Good times are inevitably followed by bad, and bad by good. Only investors who understand this can deal with phases when the markets are doing badly— or well — without damaging their own prospects.