During periods of market turbulence, I take comfort in one of my favorite Warren Buffett quotes:
“Don’t watch the market closely.”
The Oracle of Omaha gave this sage advice in 2016, when Brexit, China’s economic issues, and the Federal Reserve’s interest rate policy roiled markets.
Now here we are in June 2022 and facing turbulent markets again, thanks to inflation, global growth, and uncertainties over the Fed’s interest rate policy.
In a move unseen since 1994, the Federal Reserve has taken an aggressive stance toward inflation by raising the key interest rate by three-quarters of a percentage point.
Investors initially seemed cheerful, but stock prices soon fell as the reality emerged that interest rates would continue to rise.
With consumer prices soaring, pushing short-term rates higher is an attempt to slow economic growth while attempting to avoid a recession. Fed Chair Powell said that he expects rates to go up again at the July meeting and indicated that the Fed would take future decisions as they come.
Buffett’s words “Don’t watch the market closely.” remind us that pullbacks, corrections, and bear markets are an expected part of the investing process. Please reach out if you have any concerns, but in the meantime, take a break from watching too closely. That’s why we’re here.
Please remember that we’ve considered volatile markets when designing your financial strategy.
Wise Words from Warren Buffett
June 21, 2022