You Own Companies, Not the Economy

Did you know that Facebook was recently valued by Forbes at over $50 billion? Some think it could be as much as a $65 Billion company! The kid who owns it was born in 1984 and will turn 27 this year. That is an amazing reality.

Even in this economy companies like Facebook will find ways to make profits and grow their market share. They will buy other companies. They will make investments overseas and here at home. They will lay people off. They will reduce their prices. Some will increase their prices and add value to their product packages. They will advertise differently. They will innovate. They will do whatever it takes to return a profit to the owners.

That sounds very different from what we hear on the news and read on our internet news sources. The financial news is hyper-focused on essentially one thing on a daily basis: What is the aggregate state of the economy as measured by ___________ (you fill in the blank)?

The stock market, our country’s growth, the price of goods, interest rates, employment numbers, the list is endless. Newsworthy information is conjured up by “reporters” and presented to us in word, picture, and written format all at the same time in a never-ending and constant stream on our TVs, our computers, and now our phones.

Think about it. We are constantly faced with comparisons of this month’s numbers to those of last month, last year, and last decade. And they are constantly making predictions about next month, next year, and the next decade. What’s the point?

While politicians are in their little wooden chairs talking about how to make the unemployment number go down, and Liz Clayman on Fox News is letting you know that the DOW just went up or down another 1000 points, remember this: Some junior high-school kid just started a company that will make all of our lives a little more fun and enjoyable and make investors a little bit richer when he IPOs on his 18th birthday.

You own companies. You don’t own the economy. No one owns the economy.

Don’t sit out the next month or year or decade because the numbers from today make you nervous.

Think about these numbers instead:

~ 3 out of 4 years since 1926 have held positive returns for those who own the market. The numbers are much better for an investor who owns a well-diversified portfolio.

~ 2009 and 2010 were both VERY positive years despite 3 or 4 VERY bad months in each of those years.

So, instead of spending your time trying to time this thing, focus on owning your share of it.

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