Charlie Munger, the longtime business partner of Warren Buffett, once voiced his disapproval of introducing young people to active stock trading, likening it to initiating them into heroin use.
Though nobody likes to see their stocks get hammered, the recent negative price action could be a blessing in disguise from a long-term standpoint, allowing investors to scoop up shares at a relative discount and ride the wave back up.
The price of gold extended its losses on Friday and plunged to a seven-day low of $3,015 before the yellow metal recovered some ground after a speech by Jerome Powell. His speech indicated that inflation could reaccelerate due to tariffs.
Markets are under some duress, but the action should not cause you to change your thesis. While markets are facing headwinds, it’s important to realize that stocks are under duress in what feels like a “shoot first, ask questions later” reaction.
The market fell by 9% this week, which was the worst weekly drop since the height of the COVID-19 pandemic. The trade “solution” was a disaster. If left unchecked, this has the potential to do some real damage.
Investors are assuming the worst right now. Many are assuming the worst about tariffs, the worst about economic growth, the worst about inflation, and, in turn, the worst about earnings. To be sure, no one knows how this trade war will play out.
