A framework for the patient

An observation: The news is priced in fairly fast, the underlying economic trend less so, or less correctly, particularly as this may be circular and reflexive with the market.

Another observation: The effect of market moves, both up and down, is that the swings are in the near term indiscriminate. This may cause lesser companies to get pulled up on the incline, and the better ones to get unduly dragged down on the fall.

These are the risks and opportunities, I think, and the related questions that are basic: Is there a fundamental economic change afoot, or is the turbulence of a temporary and reactive nature? If the latter, which companies are which? And if the former, the same question in a different context…

In any case, the framework probably works best for the patient and the long-term oriented, where the element of speculation is, in theory at least, less pronounced… though never so remote to be walled off.

It’s ever present, even if you think it’s not.

WSJ – Bull Market Faces Tough Test as It Turns 11

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