Bad news fueled businesses to become more resilient: Expert

Negative headlines aren't going away, so investors will have to stay the course, Chris Davis said

Whether it's the impeachment inquiry, an ongoing trade war with China or CEOs behaving badly, negative news stories can drive the market.

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But according to Davis Advisors Chairman & Portfolio Manager Chris Davis, it's the bad headlines that helped businesses become more resilient.

"Look at the last 20 years, what we've gone through, right?" Davis asked of FOX Business' Jack Otter on "Barron's Roundtable." "We went through, you know, the Russian bond default, the emerging markets meltdown, the tech telecom bust, the collapse of real estate, the financial crisis, the Euro crisis. You know, it was two recessions, war."

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Despite all that, he said it was the underlying businesses that created value.

"They've grown, adapted, become more profitable and, therefore, more valuable over time."

- Chris Davis, Davis Advisors Chairman & Portfolio Manager

If there's one thing the consumer can count on, Davis said it's the bad headlines aren't going away. But that doesn't mean people shouldn't invest in the long term just because a recession might happen or rates might fall. He called that attitude a "loser's game."

"Investing? We're based on the idea that you will be able to be resilient, go through those periods, build wealth over a decade," Davis said. "That's, in a sense, how you maintain some equanimity when the headlines are blaring the opposite."

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Davis said he understands why people are gunshy about pulling the trigger on investing.

"People are afraid to look at [financials] because they remember the Great Recession," Davis said. "They're worried they're unstable. They trade them at cheap multiples because they somehow imagine they're risky when, in fact, they're much safer than they've ever been."

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Davis said many people will only take financial risks when they feel safe, but when it comes to investing, risk is a part of the game, no matter what the environment.

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