Today’s Take: The stock market is still the world’s greatest wealth creator right now.
Every week, I sit down with some of the smartest minds from different fields, industries and disciplines — to learn from them.
During my nearly four decades on Wall Street, I built up a huge Rolodex of contacts. And I take all of their collective experience and knowledge and share it with you through my podcast: The Charles Mizrahi Show.
Earlier this year, I had longtime broker and financial strategist Peter Schiff on the show. He knows a thing or two about how to keep a pulse on what’s going on in the markets.
Before the financial crisis of 2007 and 2008, he warned the public that the real estate market would come crashing down to earth. Few people listened to his bold predictions at the time. The mainstream media even mocked him.
But Peter was spot-on with his research then. When the housing bubble popped, the U.S. headed into its worst financial crisis since the Great Depression.
And when I sat down with him back then, he had concerns about another bubble on the horizon…
Because the last few months, we’ve seen a similar frenzy in the overall markets. Stocks, cryptocurrencies, real estate, you name it… Even with day-to-day swings, it all keeps going up.
This time around, Peter is focused on the potential for soaring inflation and the U.S. dollar plummeting. And he’s turning to foreign markets for his investments to prepare for a downturn in the U.S. markets.
Now, he might be right again this time … but he could also be wrong. Because the latest market euphoria isn’t exactly like the housing crisis.
Why You Don’t Need to Worry About the Next Bubble
There are still plenty of unknowns right now.
Even though we’re seeing some inflation from the effects of the pandemic and supply chain crunches, the dollar isn’t collapsing right now.
So, if you want to figure out where the market’s headed next, you’re almost better off tossing a coin…
Market research group CXO Advisory tracked the results of over 6,500 investment predictions made between 2008 and 2012. Many came from well-known names in the investing world. And on average, their accuracy was only 47%!
It’s good to hear a broad range of takes — like Peter’s — on what’s going on in the markets. But the bottom line is, you shouldn’t put too much thought into predictions and let them influence your investments.
I don’t follow predictions or forecasts because they’re based on too many unknowns. So, when it comes to my approach to the markets, I only focus on what’s known.
As long as you have a solid, proven approach to stick to like that, you’ll continue to make profits — no matter what the market does next.
And that’s why I’ve used my decades of Wall Street investing experience to share mine with hundreds of thousands of Main Street Americans just like you…
Keeping Your Money Safe in the Long Run
I keep it simple. I stick to identifying great companies.
And almost all great companies are run by rock-star CEOs and are in growing industries with huge tailwinds pushing them higher. If you buy them when they trade at bargain prices, the profits usually take care of themselves.
By sticking to this approach, I don’t need to worry about how high inflation will soar, if and when the U.S. dollar will collapse or what the Federal Reserve will do next with interest rates. I don’t have to worry about moving money into gold, alternatives or other markets.
So, for those of you who have written in to me lately concerned about what’s ahead, I hear you.
But the stock market is still the world’s greatest wealth creator right now. Our approach will still hold up during downturns.
Stock prices might go down in the short term. But great companies know how to adapt to changing environments so their businesses continue going higher. They know how to innovate.
And you can sleep well at night knowing you own some of the best companies out there that can adapt like that.
They’re businesses that have survived inflation and deflation … times of war and times of peace … and stock market booms and busts. So, they should continue to move higher despite any short-term volatility.
Our approach is based on logic and has withstood the test of time. We’re invested for the long haul, and we don’t bet the farm on any one position.
So, stay the course and don’t let the next fearful headlines and predictions shake you out.
Founder, Alpha Investor
P.S. Be sure to check out the next episode of my podcast. My latest guest is a bestselling author who shows how public amnesia, government overreach and poor execution can crush a promising endeavor.
On my show, Amity Shlaes and I discuss what lessons we can learn from the Great Society era today. Don’t miss it — click here to listen now!