By Michael Kovacs
It’s hard for any investor to avoid news about daily market movements and the short-term focus of business media and analyst commentary.
At Harvest ETFs we stay cognizant of these influences, but we maintain our discipline. We remain focused on the long-term growth of capital markets and superior businesses.
The lessons of my own career have vindicated our long-term approach. I became a stockbroker in 1985 when the Dow Jones was at 1300, 5 years later we had experienced the largest stock market crash since 1929, a pull back in the economy with recession and higher rates on the horizon by 1990, yet the Dow had doubled to over 2600.
By the time I launched Harvest in 2009, the markets and economy had gone through many pullbacks, the S&L crisis, the tech wreck, and the great financial crisis of 2007/8. In ’09 the Dow was down from its previous highs, but sitting at at 9000, about 250% higher than 1990. That growth represented a compound annual rate of return of approximately 7%.
Today the Dow is sitting at 30,000—which again is down from its earlier highs—but taking a wider view we see it is up over 250% over 13 years, an over 8% compounded annual rate of return. A similar long-term rate of growth over the next decade would put the Dow over 65,000.
So, when markets get wonky and all the bad new bears come out, we pay attention but stick to our longer-term goal posts. I am always thinking about the next 3, 5, 10 years not the next 3, 5 or 10 months.
Rates may be ticking up, inflation may be a battle right now but Apple will adjust and keep producing products as will Nike and McDonalds. Great businesses create and preserve wealth over the long-term.
President & CEO