The current environment seems to be one of extreme uncertainty. We have seen a strong economic recovery from last year’s global and Australian recessions – but there are worries about the resurgence of coronavirus driven by the Delta variant, peak growth, peak monetary and fiscal stimulus, high inflation, and high debt levels. And ‘get rich quick’ trading around crypto currencies and “meme” stocks like GameStop on the back of the Reddit/WallStreetBets forum phenomenon have seen some question traditional approaches to investing. In the meantime, investors are getting bombarded with more information and views around investing than ever.
Despite this, the basic principles of investing remain timeless. Any investible asset must ultimately provide a fundamental economic return - usually in the form of earnings, interest or rent - to be justified and sustained. And we have seen it all before, whether it’s cycles or optimism about some new technology or new way of trading, only to see the basic principles of investing continue to assert themselves. Fortunately, some investment experts have a knack of encapsulating this in a few words that are insightful and inspiring. Over the years, I have compiled various insights highlighting such quotes. This one looks at those of particular relevance to the environment investors face today….