Chief investment officer warns investors not to believe predictions of economic disaster
Stand up to the doom merchants because the bears are always wrong in the long run, according to one chief investment officer.
Gerry Frigon, founder of Taylor Frigon Capital Management, warned investors not to buy into predictions of impending economic catastrophe after the current bull market on Wednesday became the longest in history at 3,453 days.
It sparked off an argument of age versus metrics. Does the expansion’s age mean the end is nigh? Or are strong fundamentals an indication there is some way to go?
Frigon argued that if you were to look back at the past 100 years, being a long-term bear would result in huge losses. He added that investors should be strong enough to ignore the bears when they start touting disaster.
He said: “This is not a game in which the bulls win some and the bears win some. Over the long run, the bulls always win”
He added “The bears are of necessity short-term focused: they try to predict a short-term downturn in order to avoid it, and then correctly predict the moment to get back in. We would argue that this is a fool's errand, and that saying ‘I've been early a lot but I'm always rewarded by a recession in the end' is a recipe for missing the real opportunity to participate in the growth that takes place while you are waiting for a disaster.”
Frigon insists that long-term optimism does not mean being a blind Pollyanna and investing in any company for ever. Instead, investors should research investments carefully and look for well-run companies positioned in front of exceptional fields of growth.
He said: “Even in periods of ‘sub-par economic growth’ for the economy as a whole, there will be innovative companies that are creating or profiting from major paradigm changes.
“Investors should aim to invest in these companies through economic cycles and sell them when business conditions change, not when the unpredictable stock market conditions change.
“This does not mean that investors should not change their strategy based on the prevailing regulatory, monetary and fiscal environment that they see developing.”
