Short-term Irrationality

Mar 2007

Unless long-term economic growth is permanently halted by some event worse than any in our history, the outlook is for record high after record high occurring irregularly into the future. In the meantime, markets will continue to act irratio­nally over the short term and much more rationally over the long term.  Short-term irrationality doesn’t worry us, of course, because our success in investing has depended on being able to take advantage of short-term distortions.  Further, lower prices today typically lead to higher returns in the ensuing market recovery.