By Steve Martin
You have to read between the headlines to make your financial plan. Hardly a day goes by without a headline on trade wars, tariffs or trade imbalance. This fervor gets investors and stockbrokers itching to “just do something,” which in turn creates day-to-day volatility. The headlines themselves aren’t even the real problem, it’s the way people react to them.
Markets move in the short term on emotion, but they move long term on fundamentals. Wise advisors and investors focus on these fundamentals and how or when they may shift. But is there really a fundamental issue brewing?
Economist and author Brian Wesbury doesn’t think so. His voice has been one of few going against the grain for years. When every other economist is yelling “recession,” he is often the calm voice saying we need to stick to careful financial planning rather than chase the latest news trend.
Take January 2016, for example. The S&P 500 had just dropped over 10% in one month and most pundits called for a recession. His article Fear Is Overbought said we were poised for solid growth. He was right.
Below are Wesbury’s comments and a link to his short video. Currently, the “Trade Wars” talk is all-consuming by the financial media. Take a look at what a different, calmer, perspective has to say about it.
Conventional wisdom says we are in a trade war that threatens the U.S. economy. But conventional wisdom lacks perspective. It amplifies the noise at the expense of the facts. This isn’t Smoot-Hawley all over again. This isn’t even a trade war. It’s a skirmish with a single county.
Companies are moving out of China, deadening the negative impact the doomsayers predicted. Trade is getting freer with our larger trade partners. The benefits of the tax cuts continue to win out.
Drown out the pouting pundits. Let the data show the truth.
Brian’s video elaborates on these thoughts well. Remember, the truth isn’t spoken by one voice alone. Don’t let yourself be overwhelmed by attention-grabbing headlines and talking heads. Stick to careful financial planning, even with the winds of change seem to be blowing – because they aren’t usually blowing as hard as you think.
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