Inflation, rising interest rates, and other factors come into play when investing. In this segment of "The Crypto Show" on Motley Fool Live, recorded on Feb. 23, Fool.com contributors Jon Quast and Travis Hoium answer a member's question about how they consider macro factors for recommendations and holdings.
Jon Quast: Personally, I don't think about macroeconomic situations very much. For one, they're outside of anyone's control, and two, they're prone to change often. Oftentimes, the greatest things to be invested in are going to navigate those macroeconomic challenges. So, yeah, there's going to be challenges. Every day is a challenge when you think about it, that's life, that's adult life. You're going to wake up and there is a problem that you're going to have to solve.
I think that the best companies and the best projects are going to be able to solve those things and continue going. Not that they won't slow down or temporarily take a step back before taking two more steps forward. But I'm always more focused on the companies, or the projects in everything, and what is happening on the ground, more than macroeconomics.
Travis Hoium: I'll second that. I'll say that I think sometimes the macro narrative is actually something to invest against; so move the opposite way of what the financial market headlines are. What are we were worried about right now? We're worried about inflation, we're worried about slowing growth.
What has that done to stocks? It has just hammered growth stocks. You can go out and find really great companies that are still growing. I mean, we've seen this, this week. We're getting earnings reports about companies that are growing, 20, 30, 40%, and their stocks are dropping because they're only expecting to grow high single digits, low double digits next year.
We're getting to a point where if you take your media narrative off and you go, OK, we had a pandemic, there was some pull-forward of demand. But what is the long-term growth chart of this growth stock? And you can pick your picture growth stock out there right now. Do I believe in the growth of that company long-term, and in 10 years, will I think that today's price is a good price?
I think there's a growing number of companies right now that fit that bill. That's really what we need to keep in mind, not necessarily whether the inflation is going to be next quarter or next year. I mean, if you are an investor buying stocks when inflation was really hot in the late '70s, early '80s, it would've been a great thing to do. Sometimes going against this media narrative that we're all worried about because once it hits the media, it's already been priced into the valuation.