Around the World in 100 Words, March, 2019: Week 10
This week’s Around the World blog (ATW) looks at the terrible human tragedy resulting from the recent crashes of Boeing 737 Max 8 planes. A growing list of countries -Canada among them- have grounded the aircraft to determine what caused them to stall and crash and whether the planes are in fact safe to transport passengers. Understandably Boeing’s stock has plunged, as any fix is expected to cost millions of dollars, not counting the cost of the planes sitting on the runways of airports until they are cleared to fly. Boeing’s stock was off 13% this week alone and the link to the article here shows the extent to which this issue has affected the companies’ bottom line in the short term. What is telling about the graph, is the small uptick in the share price in the last few trading days as investors begin to move back into the stock to capitalize on the depressed share price.
This is what the institutional money managers we partner with at Dimensional, Edgepoint, Invesco and Mackenzie do every day. They assess the current share price of companies in the short term against their long term outlook. They look to maximize opportunities for their unit holders by looking past the headlines to where the company will be in the longer term. Like the Diesel-gate scandal of Volkswagen which similarly saw VW’s shares tank on the news they were faking C02 emissions, the smart money is looking at such developments as investment opportunities for long term investors.
This by no means subtracts from the human or environmental tragedy of either. It merely serves as a microcosm of what happens in capital markets everyday. All known information is incorporated into equity prices every day. But for those that can see beyond today however, the bad news of right now creates market opportunities that reward investors with longer time horizons.
Discipline, focus and expertise are the hallmarks of the professionals who manage your hard-earned savings and we are confident in their ability to contribute to a better overall investment outcome over time.
Have a great March Break!