Just this once, I agree with Paul Krugman

I don't usually agree with Paul Krugman's economic and political analysis but this time I think he is worth listening to.

Paul Krugman Picture.jpg
Stanley Druckenmiller Picture.jpg

In this NY Times article Krugman rails against the doomsayers and economic alarmists, using hedge-funder Stanley Druckenmiller as his example.  Druckenmiller recently spoke out against the burden of entitlement programs and how there is another [economic] "Storm" coming.  It is not the entitlement programs I am hear to discuss but the message from Paul Krugman, which is, "...the doomsayers haven’t rethought their premises despite being wrong again and again — perhaps because the news media continue to treat them with immense respect."

This is not a lesson of fiscal responsibility but, specifically speaking to investors, this is a lesson of ignoring headlines.  Time and again these end-of-the-world comments make headlines.  An investor should never base long-term investment decisions on these headlines.  I'll admit the US has its problems, but the great companies of America will continue to find ways to churn out billions of dollars of profits every year.  They have been doing it since the Government first started meddling in their affairs. 

Whether it is the US entitlement programs, Government Shutdown, Swine Flu, Bird Flu, or whatever other apocalypse du jour is served up in the headlines, as a long-term investor you must ignore it.

I'll end with the best piece of wisdom from the article:

So the next time you see some serious-looking man in a suit declaring that we’re teetering on the precipice of fiscal doom, don’t be afraid. He and his friends have been wrong about everything so far, and they literally have no idea what they’re talking about.

For the full article see below: