Investing is not about home runs and grand slams. It’s the fundamentals that count.
As baseball fans know every autumn, it’s tough to watch a year’s worth of work disappear in four weeks. Yet, that’s exactly what investors have witnessed in the broad stock market sell-off since mid-September.
Listening to prognosticators assign blame has been predictable. It’s global economic disorder, they say. Europe remains a mess. China is getting messy. Japan’s mess continues. And the messiness in Latin America persists.
Just look at energy prices, they say. Weaker demand for energy is why prices have fallen to 2½-year lows. Or watch interest rates hit historic lows again.
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The Kansas City Royals will return to the World Series for the first time in 29 years in the week ahead. Of course, there’s no connection between what happens on the diamond and in your portfolio. But the Royals’ brand of baseball is an example of the success that can follow from a laser focus on the fundamentals.
The Royals score runs without making hits. They steal bases, hit sacrifice flies and bunt to advance base runners. Investors can score without taking big swings by relying on measured, steady and diversified investments over time.
Just as the quest for a World Series ring can suffer slumps during a long season, a successful long-term investor knows sell-offs are part of a healthy and functioning stock market.
Financial journalist Tom Hudson hosts “The Sunshine Economy” on WLRN-FM in Miami. Follow @HudsonsView on Twitter.