“The tour we’ve taken through the last century proves that market irrationality of an extreme kind periodically erupts – and compellingly suggests that investors wanting to do well had better learn how to deal with the next outbreak.”
– Warren Buffett
The Through Line: Global stocks have been repeatedly hitting new highs, leaving investors looking over their shoulders for the bubble-bursting bogey man to appear. The bad news: extremes have been part of the economic cycle since before the days of hyper-priced tulip bulbs; some sort of pullback would be the norm, not the exception. The good news: pullbacks tend to be short lived (particularly when economic fundamentals remain largely intact) and equity markets are upwardly biased by nature. Preparation and a constructive mindset can help smooth the way if/when wobbles occur.
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