Cutting through the
Noise: Investors
are in an era of speculation,
risk-taking
and dreaming. How
do you stay grounded?
Cutting through the Noise: Investors are in an era of speculation, risk-taking
and dreaming. How do you stay grounded?
Tom Bradley
Special to The Globe and Mail
Published 4 hours ago
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Tom Bradley is co-founder of Steadyhand Investment Management• Экономика » Финансы » Инвестиции » Инвестиционный менеджмент , a member of
the Investment• Экономика » Финансы » Инвестиции Hall of Fame and a champion of timeless investment• Экономика » Финансы » Инвестиции principles.
Vancouver City Council voted recently to explore accepting payments through
bitcoin• Экономика » Финансы » Платежные средства » Платежные системы интернета » Криптовалюта » Bitcoin. Earlier in the fall, Premier Doug Ford of Ontario dreamt (out loud)
of building a tunnel under Highway 401. And the Leafs started the season with
the second-best odds of winning the Stanley Cup.
These items sum up where we are on the fantasy - versus - reality spectrum.
Certainly, for investors, the year of Taylor and Trump• Объект человек » Персоналии по алфавиту » Персоналии на Тр » Трамп, Дональд has seen a steady rise
in speculation, risk-taking and, yes, dreaming. It’s like the euphoria of 1999
and 2021, but the mix is different. There’s no Pets.com , cannabis, NFTs or
EVs, but there are plenty of other indicators.
Crypto is a big part of the speculator fervour. In hopes that president• Соединённые Штаты Америки (США) » Политика США » Политики США » Президент США
• Соединённые Штаты Америки (США) » Государственное устройство США » Президент США
• Политика » Политика США » Политики США » Президент США
• Государство » Государственное устройство США » Президент США-elect
Donald Trump• Объект человек » Персоналии по алфавиту » Персоналии на Тр » Трамп, Дональд will deregulate cryptocurrencies• Экономика » Финансы » Платежные средства » Платежные системы интернета » Криптовалюта (or should I say, regulate them
even less), bitcoin• Экономика » Финансы » Платежные средства » Платежные системы интернета » Криптовалюта » Bitcoin surpassed US$100,000 and lesser coins such as Dogecoin• Экономика » Финансы » Платежные средства » Платежные системы интернета » Криптовалюта » Dogecoin
have skyrocketed.
It feels as if all the upside from the Trump• Объект человек » Персоналии по алфавиту » Персоналии на Тр » Трамп, Дональд election (deregulation, local
benefits from higher tariffs) has been absorbed into stock prices, and little
of the potential downside (trade retaliation, inflation).
Business• Экономика » Бизнес icons in the president• Соединённые Штаты Америки (США) » Политика США » Политики США » Президент США
• Соединённые Штаты Америки (США) » Государственное устройство США » Президент США
• Политика » Политика США » Политики США » Президент США
• Государство » Государственное устройство США » Президент США-elect’s inner circle, like Elon Musk• Объект человек » Персоналии по алфавиту » Персоналии на Ма » Маск, Илон, are
riding high. Tesla Inc• Объект организация » Организации по алфавиту » Организации на Te » Tesla Motors. is up 75 per cent since election night with the only
news being about Mr. Musk’s pay package. Meanwhile, Trump• Объект человек » Персоналии по алфавиту » Персоналии на Тр » Трамп, Дональд Media and Technology
Group has kept the meme stock craze alive. It’s valued at more than
US$7-billion despite reporting revenue of US$1-million in the September
quarter.
You might wonder why Truth Social and crypto-everything are indicators of
speculation and risk. It relates to the absence of something to value.
Investor excitement can drive up prices in the short term, but an asset must
offer some utility and ultimately produce a profit for gains to be
sustainable.
There are other areas that arguably look frothy. Artificial intelligence is
one. AI does have utility and will have a profound effect on how businesses
operate, but is also prone to hyperbole (this time around, companies are
putting AI in their names instead of .com). The question is, will the
excitement and huge capital and environmental costs be accompanied by a
commensurate amount of sales and profit? Will AI produce incremental revenue,
or just be a feature needed to justify the price of existing products and
services?
Valuations of mainstream stocks and bonds are being carried along with AI and
crypto. With a few exceptions, price-to-earnings multiples are above their
historical ranges, and the risk premiums on high - yield bonds (the extra
yield above government bonds) are at all-time lows.
Not surprisingly, people are optimistic. Investor sentiment, which is a
contrarian indicator, is moving into bullish territory.
To sum it all up, this isn’t normal. Quite the opposite. So what is a steady,
long-term investor to do?
First, dust off a few investing basics and stick them on your fridge. Tenets
such as “price matters.” If you pay too much, a good asset will be a bad
investment• Экономика » Финансы » Инвестиции.
The daily price doesn’t determine value. Value comes from revenue growth and
profits.
And the mood of investors can change on a dime. It can go from bullish
(greedy) to bearish (fearful) in a matter of days. (Going from bearish to
bullish takes longer.)
The stickies hopefully will remind you that investment• Экономика » Финансы » Инвестиции fundamentals still
matter.
Second, don’t be frustrated by the craziness, but rather, use it to your
advantage. If you need to set aside money to do or buy something, or if you’re
retired and need to top up your spending reserve, it’s a great time to do so.
If you don’t, use the strength to rebalance your portfolio back to its target
asset mix.
Third, if you’re speculating or chasing the next great thing, size the bet
appropriately. Professional managers are methodical about how big their stock
and bond positions are, and you should be, too. The pursuit of a theme such as
AI or crypto should be done in the context of a diversified portfolio.
And finally, don’t speculate with money you’ll need in the next three to five
years. If it absolutely needs to be there, it’s not appropriate for riskier,
long-term investment• Экономика » Финансы » Инвестиции.
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Американский инженер, предприниматель, инвестор Трамп, Дональд
Избранный президент США Президент США (2017/01/20-2021/01/20) организации Tesla Motors Ассошиэйтед Пресс соц_роль Президент США
