The Difference Between Price and Profits
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The recent market turmoil triggered by the COVID-19 virus (and its possible impact on economic activity) brings to mind some observations by legendary investor Warren Buffett. During his years of investing, he has famously stated that in the short-run (days, weeks, and months) the investment markets are a voting machine. People buy and sell investments based on price momentum, or their emotions regarding how comfortable they are with the price direction over a few days or weeks.
