The word “tariff” appeared 22 times on Yahoo! Finance’s home page recently. That’s a lot of tariff analysis. But all of this misses the core of what investing is, suggests Ben Reynolds, editor of Sure Dividend.
Yes, tariff news seems to change at an almost daily pace. This rapid change makes it very difficult to conduct a detailed analysis of individual companies. Similarly, focusing on short-term macroeconomic data is often unhelpful for long-term investors. The same goes for over-emphasizing short-term results for individual companies.
All of the above can cause fear, plus unnecessary selling and buying. There’s always some reason to sell a stock and buy another in order to better position yourself for the next quarter, or month, or even week.
But investing is fractional ownership of real businesses. And it doesn’t make sense to judge a business based on the “what ifs” that may occur from short-term-focused daily news. Instead, we believe investors are likely to do best when they focus on investing for the long run.
By focusing on long-term results, you can outlast current events. They lose their sting when judged from the sobering multi-year perspective of the long-term investor.
What will tariffs be in four weeks, or four months, or four years? I have no idea. But a company that has increased its business for 30 or 40 or 50 consecutive years will almost certainly be able to respondand adjust its supply chain as needed.
The idea behind long-term dividend growth investing is to invest in high-quality businesses that are likely to be able to pay rising dividends over a wide range of economic environments. When you invest in shareholder-friendly businesses with strong competitive advantages, the day-to-day gyrations of the market and the attention-grabbing headlines of the non-stop financial news cycle matter much less.
