Over the past week, the financial press has come up with some scary headlines. “Stock markets rocked by… whatever“, “FTSE 100 slumps after… something or other“. You know, stuff like that. The noise they were making about share prices is still ringing in my ears.
But just a week later, I really can’t remember the events the headlines were shouting about. As soon as a headline has served its purpose, the target shifts to tomorrow’s eyeballs. Meanwhile, the companies behind it all just go quietly about their business.
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The core driver of every FTSE 100 company is to generate a long-term stream of profits for its shareholders. The key there is long-term. And the ones that have been in the top stock market index for any length of time tend to be very good at it.
A week of ups and downs
But what has actually been happening to the Footsie? Well, the biggest daily fall I can see over the whole of last week was a little over 2%. And we had falls of more than 3% over two days. That might not sound a lot, but it represents billions of pounds.
But before I worry about these apparent losses, I also see a biggest daily gain of more than 2%. And a two-day gain of more than 3%. Over the entire week last week, the FTSE 100 moved by less than half a percent overall. Oh, and it was a half percent gain.
That was a week in which the daily headlines made it sound like chaos had broken out.
What’s the fuss?
Other than glancing at, and then largely ignoring, the headlines, I had no idea what the Footsie was up to. Until the weekend, I hadn’t bothered looking at the numbers. And when I did, it was ‘Meh, what was the fuss all about’?
This tells me one main thing. It’s OK to switch off and go enjoy the sunshine. Investing in shares does not mean sticking to the computer screen every day, watching millions of day traders getting in and out.
In fact, switching off is exactly what I reckon every long-term investor should do. For each of my investments, I care about only two prices. Those are the price I buy at and the price I sell at.
Ideally, the two events will be years apart. And not one single day’s price in between will make any difference whatsoever.
FTSE 100 closed?
Billionaire investor Warren Buffett famously suggested we should invest today as if the stock market was set to close the next day and stay closed for 10 years. So I’m buying shares that I want to keep for at least a decade. The prices, and the emotive headlines in between, won’t matter.
I want to offer one final thought. I’ve been writing about last week, without mentioning any dates. And I avoided the actual headlines. You might be reading this sometime in the future, after another turbulent week on the FTSE 100. Do these thoughts sound like they describe… last week? I’m betting they do.