The Big Picture Counts More Than Ever
Investors are often cautioned to ‘ride out the storms’ – meaning the dips and dives – of the stock market in order to realize gains in the long run. However, watching life savings evaporate is more than unsettling: it is panic-inducing. The natural reaction is to get rid of the worst performing stocks in your portfolio in an effort to stop the bleeding.
There are several factors at play in the current market, though. While rising prices and interest rates are certainly affecting earnings, we must not forget the impact and recovery cycles of the pandemic.
Consider a contract catering company. As the pandemic forced office, school, and event closures, and people quit eating socially and in groups, the catering company lost business. Its share price dived 46pc. For the faint-hearted, it was an obvious decision to get rid of this stock. But, when pulling out to look at the bigger picture, we remember that the pandemic will end, and people do need to eat.
By hanging on to that stock, its investors saw a steady recovery as those same offices, schools, and events came back, populated by hungry people. They are experiencing double-digit sales growth, and impressive growth to its margins.
The takeaway? There are more influences on each of your stocks than is readily apparent. How are the sales margins? How is the business influenced by high inflation? Has it fully recovered from the pandemic? How will rising energy costs affect its business? Where are its customers? The U.S.? Europe? Asia? What are its strategies compared to its competitors?
This is where our expertise can guide investors through mountains of data and come out ahead. You can order up your favorite comfort food while we crunch the numbers. Your retirement is in good hands.
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