Urgent News to Gain our Attention
We www.cymorfund.com are smitten daily with instant news from around the world. This overload of information colors our understanding of events occurring around us and makes the seeming urgency of today’s news distort our understanding of longer term trends.
Whether Greece will leave the EU, or whether Japan has an aging population, has to be taken in a longer term context, rather than the hysteria of today’s headlines. We are bombarded with information that is portrayed as “URGENT”, whereas it is the media need to gain our attention that is urgent.
Reporting the news is a method to get us to pay attention. If we pay attention, advertisers will pay the media to advertise to those that are paying attention.
Some Examples of Today’s Urgent News
China is experiencing a slowdown; or China has enough reserves to continue its boom.
The EU debts are crushing and impossible to deal with; or Germany is roaring ahead economically and has enough strength to carry Europe with it.
Pick whichever headline that you like. If you are a pessimist, the economics of the world are terrible. If you are an optimist, the world has sufficient resources to fuel growth after the current fears abate.
The Secret Cartel That Rules the World
Some people are believers in secret societies, conspiracies and behind the scenes agreements and Cartels that rule the world, such as Goldman Sachs and other Wall St giants. Actually, I don’t regard this particular view as crazy as it initially sounds.
These economic powerhouses have sufficient capital to dramatically influence any market, and I have no doubt that they do so, in both positive and negative directions.
Don’t forget that they are Traders and as long as the market is moving in either direction, they are trading and making profits.
An Overview of World Economics
The point of all of this, is that short term movements and ‘urgent’ news, do not influence long term trends. There are many factors that influence the markets, including large trading houses, or events around the world, but the important thing is to understand the long term trends and act accordingly.
One long term trend is the COMMODITY CYCLE.
Resource Stocks Have Legs
One of the sharpest central bankers in the world says this commodity cycle still has legs. Bank of Canada
Governor Mark Carney, who is also Chairman of the Global Financial Stability Board, was quoted by Reuters, in saying that it would be an error to think that the current elevated levels of commodity prices are a temporary phenomenon.
Carney said, “Eventually, all commodity booms end, but this one in our view will go on for some time.”
Foreign investors sold $2.6 billion of Canadian stocks in January and February alone. This represents the worst ever January-February outflow. Obviously, foreign outflows were probably horrible in March and April with the S&P/TSX Composite and the S&P/TSX Venture indexes falling.
The greatest concentration of stocks listed on these exchanges are commodity stocks, so commodities took a beating because of worldwide fears.
In every cycle, as the bottom nears, investors and people everywhere become more nervous that ‘the bottom is falling out beneath us’. Chicken Little was terrified that “The Sky is Falling”.
The facts are that the bottom of every cycle is the start of the next cycle, and a cycle does not end until there is pretty well universal agreement that things are so bad that they can’t get better.
The Long Term Trend
Just remember, there are more middle class consumers than ever before, by a wide margin. All of these people with new found wealth are demanding more and more goods and services. Commodities will continue in great demand for the foreseeable future.
Be part of the next great boom. Don’t despair and don’t sit on the sidelines paralyzed by fear.
The views expressed in this blog are opinions only and are not investment advice. Persons investing should seek the advice of a licensed professional to guide them and should not rely on the opinions expressed herein. This blog is not a solicitation for investment and we do not accept unsolicited investment funds