by Bill Bonner
OUZILLY, France – “In the short run,” says billionaire investor Warren Buffett, “the stock market is a voting machine. In the long run, it’s a weighing machine.” Put another way, in the short run, the stock market responds to myths and fads. In the long run, these give way to facts.
[…] Remember, myths are not necessarily untrue. But whatever truth they have seeps from human imagination, not from facts imposed by the outside world.
Gravity, for example, is a fact. You jump out of a second story window; it doesn’t matter how hard you flap your arms or what you think, gravity will pull you down toward the sidewalk.
Corporate profits, too – though they can be manipulated and massaged – are facts. Mythical profits don’t pay real bills. But there are other “facts,” too… those that owe their existence entirely to our myth-making ability.
They may begin life as plausible observations. But then they have a way of growing, expanding and mutating into outsized delusions – ones that may cost a nation its money and its soul.