Focus on the long term

Yesterday’s trading session was once again not for the faint of heart. The DAX moved an extraordinary 11% between its low and high, while the S&P 500 saw intraday swings of 7.8%. For any trader, this level of volatility is extremely difficult to manage—especially when it’s driven by quickly reversed rumors, like a supposed 90-day tariff reprieve, or impulsive tweets threatening 50% additional import taxes on Chinese goods.

But a step back helps bring things into focus. History shows us that the worst drawdowns during the year rarely determine how the year ends. Even sharp drops, like the 33% decline in the MSCI World Index in 2020, can still be followed by positive full-year returns.

As Benjamin Graham wisely said: “In the short term, the market is a voting machine, but in the long term, it is a weighing machine.” Daily noise may shake prices, but over time, it’s the fundamentals that matter. That’s why we continue to invest in high-quality businesses at attractive valuations. From there, the power of compounding quietly does its work.