Sound financial decisions are based on sound analysis.
People who only consider the short-term – or hold an overly narrow point of view – can benefit from the advice to "put things into perspective."
Because without perspective, we're certain to repeat the same short-sighted decisions, one after another.
Consider this headline:
Median sale price of homes in Washington, D.C., hits record high
Washington Post, April 10
Perspective is key.
Someone who is unfamiliar with housing's long-term price trend might think, "Now is the time to buy, before prices go even higher."
Here's another perspective:
Headlines proclaim that the real estate market is recovering. 'Best market in five years,' say the statistics. It’s a true statement. But to understand how misleading it is, look at [the chart below]. The latest recovery has taken ... one-family home sales back only to the levels of prior recessionary lows. Had these measures fallen straight to current levels from 2006, people would be calling it a deep slump.
The Elliott Wave Theorist, March 2013
Headlines and commentary also reflect the stock market's recovery. One commentator has grabbed bullish sentiment by the horns.
The market’s risk/reward ratio remains attractive both short- and longer-term. I see the Dow Jones Industrial Average ending 2013 at between 14,750 and 15,100; by the time this cycle ends in 2015, the Dow will be at 18,000.
Marketwatch, April 9
It's true that the Dow Industrials are in record-high territory. Prices might climb even higher.
In his latest Elliott Wave Theorist, Robert Prechter puts the stock market's price pattern into proper perspective just like he does with real estate. The issue starts with the title, "More Amazing Charts."
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Editor: Robert Prechter
Published since: 1979
Markets: U.S. focus
Scope: Medium to long term