Six long-term economic and investment themes

(May 22): Successful investors rely on basic analyses of hard facts and trends and try to avoid short-term emotional responses. They evaluate fundamental forces, decide on the investment themes they imply, and then invest. Of course, their positions are constantly examined in light of new data, and investments are eliminated if the basic atmosphere no longer supports them. Still, successful investments are usually long-term because they flow from forces that are significant and likely to be in place for some time — years or even decades.

The challenge is to recognise the difference between a sea change of lasting consequences and ephemeral random noise. Most security-market analysts and investors thrive on short-term swings that they interpret as being of huge significance. The media gains attention — and advertising dollars — by interpreting every minor wiggle as an earth-shattering event. So it takes conviction and willingness to stand up to the crowd to stay focused on long-run economic and financial trends and the implied investment implications.

With Trump’s agenda mostly stalled, many investors are swinging to my earlier conviction that much of the post-election euphoria was overblown, at least in terms of instant actions, and are reorienting their sights to the long-term.

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