The Opportunities Go to Those Who Can See Past the Negative Headlines

The Opportunities Go to Those Who Can See Past the Negative Headlines

“Follow the trend lines, not the headlines.”

The quote, attributed to former President Bill Clinton, is one of my favorite pieces of advice. Clinton was referring to long-term data that show that conditions have actually been improving for the human race despite popular opinion to the contrary. When applied to investing, it cautions against missing opportunities because you’re too busy reacting to negative news.

To be sure, there’s more than enough negative news right now: international trade tensions, volatility in Syria, Brexit, impeachment and much more.

As I’ve said before, I happen to be a news junkie. The U.S. Global Investors office has a number of TVs, all of them tuned to financial news networks. I constantly urge everyone on our team to stay informed and raise their awareness of what’s happening around the world and in their communities.

But this alone doesn’t guide our investment decisions. If we based everything on what the talking heads tell us, we may never have the confidence to invest so much as a dime.

Instead, we focus on fundamentals such as moving averages and standard deviation. We follow leading indicators such as the purchasing manager’s index (PMI) and consumer confidence index. These factors are many times more effective than the headline news at shining a light on the right path.

Mike Matousek, head trader at U.S. Global, has a colorful saying that complements this idea: “It doesn’t matter if they make jelly beans or trash can lids, if a stock’s going up, you want to own it.” And conversely: “If it’s going down, you don’t want to own it.”