Photo: Jack Delano, 1941. Source: Library of Congress
As a schoolboy, I remember standing around for what seemed like hours in the early-morning darkness. I’d peer anxiously down the road, hoping to see that big, lumbering orange shape. Eventually, it would show up and I would climb gratefully in, letting the steamy warmth seep back into my body. It was cold waiting for the bus on those early Minnesota mornings!
Today we find ourselves waiting for the markets. Waiting for them to deliver earnings, or news of more US-China trade tensions, or Brexit developments in the UK, or speeches by Federal Reserve officials. We look anxiously down the road, hoping the news will be encouraging – or at least, it won’t cause a market panic, where selling leads to price declines which leads to more selling. That’s a bus I’m not anxious to get on!
It’s hard to wait. We want to do something. We get jumpy and nervous. We live in an era of instant gratification. We’re hate to be put on hold when we call someone. Companies know this. Some airlines “take your number” technologically and promise to call you back when it’s your turn. This relieves, but can’t eliminate, the dead weight we experience when we find ourselves in suspended animation.
But market developments take time. Companies need time for investments to pan out, employees need time to develop the skills they need for new jobs, busses need time to get from one stop to the next. Just because a corporation is going to have a billion dollars in sales in the future doesn’t mean the company is worth a billion dollars today. There are all kinds of risks that can derail their plans. That’s what markets need to try and balance: plans for growth and the uncertainties around those plans. When we’re more uncertain, market volatility goes up.
History is full of people who waited years for the right opportunity, who took that time to get ready for the main chance. Sometimes, waiting for the bus is exactly what we should be doing. As long as we take the right bus!
Douglas R. Tengdin, CFA
Charter Trust Company
“The Best Trust Company in New England”