I’m a big admirer of these two fund managers because they have the ability to be patient and sit on huge cash positions until real opportunity knocks.
Maida especially, who was 60% in cash going into the recent sell-off.
The longer I invest, the more I appreciate the weapon a big cash position provides. If the market goes straight up for a decade you will underperform if you sit on a lot of cash. But you will still generate positive returns and avoid any chance of large losses.
If opportunity knocks and there is a huge correction like 2001/2002 or 2008/2009 that big cash hoard guarantees you are going to be buying stocks from people selling who are giving no consideration to intrinsic value.
Here is the globe and mail chatting with these two value investors and the opportunities they are now seeing:
“Several of Canada’s most prominent value investors see bargains amid stocks beaten up in the recent market turmoil.
While the S&P 500 (SPX-I1,162.3538.533.43%) soared 3.4 per cent Tuesday, largely on expectations that U.S. Federal Reserve chairman Ben Bernanke will announce additional stimulus measures this Friday, the managers aren’t betting on another round of quantitative easing to buoy stock prices.
Rather, they believe that several stocks have now fallen to levels that make them attractive on fundamental measures, such as dividend yield, earnings and cash flow. As a result, they’re tapping into the large reserves of cash they’ve built up in recent years and snapping up stocks they believe are good long-term holdings, no matter what the market does from here.
“This is a good time to buy, and not be afraid to average stocks down,” Francis Chou, founder of Toronto-based Chou Associates Management Inc., said Tuesday. “You cannot time the market.”
For entire article: http://www.theglobeandmail.com/globe-investor/investment-ideas/value-investors-snap-up-stocks-in-pummelled-market/article2139332/
