John O'Connell's Top Picks: December 8, 2021
BNN Bloomberg
Top picks from John O'Connell, chairman and CEO at Davis Rea
MARKET OUTLOOK:
Recently, gloomy headlines have taken to note that stocks have moved in larger ranges than has been accustomed these past months. Not surprising really. When we get comfortable, change is sure to follow. Night follows day. There is a rhythm to things, and like all complex organisms, the world according to market prices has its rhythms.
Good news is uninteresting. Bad news, on the other hand is eye-catching, and for the past 18 months, doomsayers have been calling into question the steady advance of stocks. The hallmark of a durable advance is skeptics. That skeptics will be right eventually as to acknowledge that a stopped clock is right 2x per day. That is the certainty of a clock, but it’s a bad way to invest, much less tell the time.
What gloomy headlines get wrong is, it’s about your investing time frame, not their deadline for today’s news. Headlines know nothing of your time frame, your objectives, or the skill with which you choose to handle your savings. And yet, the biggest news organizations in the world continue to broadcast stormy music. That is their business model (Breaking News!), and it vies for your attention.
Recently, a headline screamed out to the affect that ‘with the Fed meeting about two weeks away and the uncertainty around Omicron, liquidity will likely be challenging.’ This doesn’t make for a great backdrop for equity risk. People just want to get through December. Nobody wants to ruin their year in the remaining few days down the homestretch.
We suggest you stick to long-term investing, focus on owning great franchise companies and avoid sensational headlines. This time of the year is a classic time to be bombarded with forecasts and warnings of what is to come. Ignore it. This time of the year is no more likely to generate good short- term thinking than any other week of the year. The companies you own continue to chug along irrespective of the gloom and the forecasts for the market.
