Beating a dead horse

We’ve all heard of the expression: beating a dead horse, haven’t we? It means to keep at something despite the unlikelihood of having any meaningful effect. The expression comes from 19th century England when a politician reportedly used the phrase — more specifically, he would have said flogging a dead horse — to express frustration at convincing people on issues of importance.

Well, at the risk of beating a dead horse, I want to discuss, yet again, the movement of the stock markets and how taking a step back is important when considering long-term investment decisions.

Not all is doom and gloom

When I last discussed this issue over a week ago, a summary was given of all the bad news surrounding the markets, which then carries over into other areas of the economy  — manufacturing, GDP growth, etc., — to paint a glum picture of the future.

And there was one glimmer of hope that suggested the overall outlook might not be that bad? What was it? The prospect of a continuing strong jobs market. And what happened after I wrote that brief analysis? An extremely strong U.S. jobs report came out and, you guessed it, stocks rebounded considerably. Here’s a screenshot of the headlines at the end of that day:

stock market fluctuations

And now here’s a stock chart of the Dow Jones Industrial average for the last month:

dow jones industrial average

Again, it’s the long-term that matters

As you can see, January 4th was the date of the upbeat jobs report released by the U.S. Labor Department, which was the exact day of that huge spike in stocks that you see; and the level of the stock index has kept getting higher, reaching levels seen prior to a very rough end of December.

So, again, what does all of this mean? The simple answer is nothing. Long-term investors should just ignore short-term stock-market fluctuations. However, given how much attention is given to the markets, it’s important to put them in perspective, even if it risks beating a horse to death over and over again.

ASCEND GRP is an asset-management firm, with offices in Toronto, Richmond Hill, and New York, that services clients seeking investment opportunities worldwide.

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