Divorced From Reality?
“In some sense, the stock market has always been “divorced from reality” since its job is not to report today’s temperature but what investors think it will be next year and the year after that and the year after that and so on.” –Weston Wellington, V.P, Dimensional Fund Advisors
What’s going on with the stock market? How can the markets be flirting with new all time highs with arguably the grimmest headlines we’ve had in our lifetimes?
Check out Wellington’s recent article, Is the Stock Market Divorced From Reality?
Wellington has always had the knack of being able to put confusing events into perspective. This article is no exception.
No matter what the current environment is, some firms will prosper while others will flounder. The current economic turmoil has crushed many companies while opening up new prosperous opportunities for others. By broadly globally diversifying, we can best capture the returns of these prosperous companies.
As Wellington points out, the market’s are forward looking. Focusing on today’s economic data is akin to driving a car by the rearview mirror rather than the road ahead.
Read the paper to stay informed….not to make financial decisions.