저자: Chua Lay Hoon · 외국인
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so we just got fresh inflation data a week or two ago and guess what it showed that yet again the annual inflation rate has risen in the u.s inflation is now running at seven percent per year we know that because of this inflation jerome powell and the federal reserve are looking to raise interest rates three times this year aka they're looking to put the clamps on the economy and slow business but of course a natural outcome of raising interest rates is that businesses and thus stock markets tend to look less enticing whereas super safe government bonds start to look more enticing and that doesn't necessarily mean the stock market will go down but a high interest rate environment certainly puts a lot more pressure on the stock markets than a low interest rate environment and this has been concerning investors they've seen great gains over the past few years but they're now worried that as interest rates go up we won't see those gains continue and in fact we might see the opposite and with inflation now tipping over seven percent the doom and gloom narrative is really starting to catch on in the media which just makes everything seem a million times worse these days it's pretty hard to avoid a big negative headline front and center on these news sites that isn't talking about inflation or interest rates or the fed but seeing all this talk and discussion and worry about inflation and interest rates always brings me back to what peter lynch the author of one up on wall street said all the way back in 1994 no one can predict the stock market they try to predict interest rates i mean this is a if anybody predict interest rates right three times in a row they'd be a billionaire concern there's not that many billionaires on the planet it's very you know i took i had logic so i had a syllogism and uh studied this when i was at boston college they can't be that many people who can pick interest rates because there'd be lots of billionaires and no one can predict the economy a lot of people this room were around in 1981 and 82 when we had a 20 prime rate with double-digit inflation double digit unemployment i don't remember anybody telling me in 1981 about it i didn't read i studied all this stuff i remember every time we got the worst recession since the depression so what i'm trying to tell you it'd be very useful to know what the stock is going to do it'd be terrific to know that the dow jones average year for now would be x then we're going to have a full scale recession our interest rate's going to be 12 that's useful stuff you never know it though you just don't get to learn it so i've always said if you spend 14 minutes a year in economics you've wasted 12 minutes and i i i really believe that i play that clip all the time whenever i feel like i'm being sucked into market prediction territory i just go and watch that and i love that clip because it really makes you realize that these market predictions and interest rate guesses that they're a constant in the world of the stock market this is a lecture from 1994 and all of the talk back then was whether the stock market will crash and what interest rates will be but did it matter i mean have you ever taken a finance or economics class where they referred back to what the interest rates were in 1994 and how much it influenced the long-term performance of the stock market no because it was totally inconsequential you know back then the s p 500 was at 460 points but today it's at 4 600 points but it's funny that at the time that topic was being talked about as though it needed to be figured out or it could spell doom and gloom for investors and today we still talk about it in the exact same fashion we're still talking about inflation and interest rates like the be-all and end-all of the markets so i hope you get the same feeling that i do after watching that clip you know it didn't matter back then so it probably doesn't matter now either not if you're in the market for the long term alan greenspan is a very honest guy he would tell you that he can't predict interest rates he can tell you what short rates are going to do the next six months try and stick them on what the long-term rate will be three years from now they'll say i don't have any idea so how are you the investor supposed to predict interest rates if they had a federal reserve can't do it so i think that's uh but you should study history and history is the important thing you learn from what you learn from history is the market goes down it goes down a lot the math is simple there's been 93 years a century this is easy to do the markets had 50 declines of 10 or more so 50 declines in 93 years about once every two years the market falls 10 percent we call that a correction that means that's a euphemism for losing a lot of money rapidly we call it a correction and uh uh so 50 declines in 93 years about once every two years the market falls 10 all those 50 declines 15 have been 25 or more that's known as a bear market we've had 15 declines in 93 years so every six years the market's gonna have a 25 decline that's all you need to know you need to know the market's gonna go down sometime if you're not ready for that you shouldn't own stocks and it's good when it happens if you like a stock at 14 it goes to six that's great you understand the company you look at the balance sheet they're doing fine you're hoping to get to 22 with it 14 to 22 is terrific 6 to 22 is exceptional so you take advantage of these declines they're going to happen no one knows when they're going to happen that's the key message for investors for all the investors worrying about inflation and interest rates and a recession just replay that clip a million times over there are things that would be lovely to know where the s p 500 will be at in a year or what interest rates will be at in two years but you just don't know that and nobody does yes inflation might run rampant and yes interest rates might be hiked to 15 yes the stock market might tank 30 percent but you won't know if or when that will happen so as an investor what you really need to do is you need to as peter lynch said you need to accept that the market is going to go down sometimes you know market declines happen no one predicted the pandemic boom it hit the us and the market tank 30 at the start of 2020.
tell me that series of events was going to occur in october 2019. nobody knew that just a few months later their portfolio was going to be worth 30 percent less so the thing to do as an investor is to accept that these events will occur and accept that they will catch you completely out of the blue if you're at peace with those two things then you can start to get in a better frame of mind as to how to approach your investing and spoiler alert it's to always maintain a long-term mindset well obviously the markets market's gone up tenfold since i stopped running magellan so you make more money on the upside the market's been a lot higher in 10 years from now 20 years from now 30 years from now trying to predict the market is really a waste i don't know what's going to do it can go down when i ran magellan 13 years declined 10 or more nine times the market wow i had a perfect record i went down more than 10 every time where the market went down and went down more but over the long term the upside is more than the downside so you gotta say yourself do i need the money in the next month do i need the money next year do i have kids going to college i have a wedding coming up then you're a bad investor if you if you can keep putting money in your 5 10 15 20 25 year you should do well so there you go the market goes down you won't see it coming and it will sting you at some point along your investing journey so with that in mind what are you going to do as peter lynch just said if you're investing money that you need in the short term to make a quick buck in the market then you're a fool you know if you're investing money you'll need to pay rent if you're investing money you'll need for your kids tuition if you're investing money you need for the upcoming wedding then you are a bad investor because the market might go down in the short term remember we don't know when it's going to happen and if it does happen to go down in the short term then you're screwed but if you invest money you don't need and you keep adding to your portfolio periodically over 10 20 30 years you should do very well so at the end of the day in peter lynch's eyes the answer to the question how should you be investing during high inflation how should we be investing during times where interest rates might go up a lot is we should approach it the same way we always approach investing we need to approach it rationally and not speculatively know that bad stuff will happen sometimes know that you are going to cop it at some point and that may be at a time when inflation runs hot and interest rates are hiked or it could happen tomorrow at 2 41 in the afternoon but who cares stay rational stay focused on the long term and that is the easiest solution to knowing you're going to do well investing in the market during these times but it's all about your investing temperament don't get caught up in the news don't get caught up in the speculation don't be influenced by fear or hype so they're always something to worry about and the key organ in your body in the stock market is your stomach it's not the brain if you can add eight and eight get reasonably close to 16 that's the only level of math you need to know you don't know to need the area under the curve remember that quadratic equation and an integral calculus and the area under the curve i mean whoever cared what was under the damn curve but you had to study this you don't need this in the stock market so all you have to know is you're going to see it's always going to be scary there's going to be always something to worry about you just have to forget all about it cut it all out and own good companies our own turnarounds study them and you'll do well and that's all there is and i'm ready for question so in conclusion it's always going to be scary there's always going to be something to worry about but all you need to do is own good companies and adopt the long-term mindset and all of a sudden what happens with interest rates and inflation and short-term performance of the market really doesn't mean as much and honestly i kind of wish peter lynch just kept going with that clip and said specifically what characteristics he likes to see in those great companies that help protect them in inflationary times i think it would have been cool to actually hear it from the horse's mouth from lynch himself but having studied other great investors over the past few years a few points i've learned are that you want to look for companies that are simple enough for you to understand ones that have competitive advantages and thus pricing power to be able to raise their prices and not suffer any consequences and then you also want to check the company's debt structure so that for example if most of their revenue is soaked up by interest payments you don't want that interest expense to rise a lot if interest rates do so checking fixed rate versus variable rate debt is always a good idea but overall guys that is a selection of advice from peter lynch that hopefully gives you some context as to how to go about investing in times of inflation and when interest rates and the federal reserve are you know making news headlines every other day so hope you enjoyed the video leave a like on it if you did if you'd like to learn more about the peter lynch and the warren buffett style investing strategy you can check out profitful links down in the description below if you wanted more new money content short form new money content then check out new money clips as well but guys that will just about just say i hope you really enjoyed the video i hope you got something out of it and i'll see you guys in the next video
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