Reflections on Noise

As the titles suggests

Good morning,

Today I wanted to write something slightly different to my usual variety of content.

I want to talk about noise.

I have long stated that my favourite quote is Graham’s long-term weighing machine and short-term voting machine line.

I actually like this quote because it works on so many levels.

At its core, it relates to the fact that markets tend to price assets closer to their intrinsic value over a long period of time. Whilst, in the short-term, they are priced based on whatever narrative is ruling the financial headlines at that time.

It also says to me, that in the short term, noise is noise.

There is, obviously, a healthy dollop of context that needs to be applied. Sometimes, we can see narratives breaking down in, what seems like, real-time. This could take place over a month, or even a few days in some cases.

How I like to read the quote, is by acknowledging that noise is everpresent in the marketplace. It does not vanish simply by holding a company for ten years. …