Warren Buffett Says, "Don't Watch."

Warren Buffett Says, "Don't Watch."

September 26, 2023

Have you ever heard the expression, "If you love sausages, never watch how they're made?"

The same is true of stock prices. Warren Buffett once said, "I would tell [investors], don’t watch the market closely."

In recent weeks, oil prices have rallied higher, and the Fed indicated higher interest rates may be here for a while. And there’s a headline risk that lawmakers may struggle to get a budget passed (remember the debt ceiling debate in May), which may lead to a short-term government shutdown.

If you listen to market pundits, it sounds like it’s going from bad to worse.

But August is over, September is coming to a close, and next up is October–a month that has had its share of volatile moments over the years. It’s a seasonally weak period for stock prices, and that’s important to remember as stock prices churn a bit. Summer ended on September 22, so take a break from scrutinizing stock prices and focus on enjoying your favorite fall activities. 

Wall Street always has to have something to worry about. That’s where the expression, “Wall Street climbs a wall of worry” originated. It means financial markets continue to navigate an endless stream of economic and political uncertainty.

We recognize that debt ceiling debates can be nerve-racking, and obviously the implications for investors are uncertain.  However, historically, Congress has always raised the debt limit.  If Congress failed to increase the limit in time, it is not clear what that would mean in practical terms.  A range of payments could be impacted, from salary payments for federal workers to interest and principal payments on federal debt. But trying to predict likely scenarios is largely unproductive, given that markets have priced in the potential range of outcomes. Sticking to a sound investment plan that is designed to achieve long-term goals can help investors see beyond the current turmoil.

Rest assured that we are closely monitoring debt ceiling negotiations and keeping an eye on how the Fed is managing inflation with its monetary policy. When investors face uncertainty, diversification remains one of the most important risk management tools available to them. Although a US government technical default likely would trigger reverberations throughout global markets, we believe a balanced asset allocation of global equity and fixed income investments combined with a long-term investment horizon are the best tools investors can use to help ride out short-term and close-to-home uncertainty.

If you want an update, please reach out. Otherwise, it may be best to follow Warren’s advice and not watch too closely.