This is another big reason why I love the media!!! Back 30 years ago when Affirmed won the last Triple Crown the media was not nearly as prevalent in the "hype" factor.
The old Buffett adage of "be greedy when others are fearful and fearful when others are greedy" can be used in many different areas to make winning bets.
Anytime you have a "sure thing" and everyone else thinks it’s a "sure thing" (like Big Brown who had $6 million bet on him to win outright) it’s bound to disappoint. You pay a hefty price for a rosy consensus.
Now take the opposite end of the spectrum and think about the market of today. I don't typically like to think in terms of the general market however I often find myself asking the question - "is the market more risky or less risky today..." as compared to last year, or 3 years ago??
All you have to do is turn on the news and you'll see widespread pessimism. Looking at the recent 52 Week Lows on Morningstar shows there are some pretty sound franchises that are just beaten down by the market.
Regardless of what happens this year, valuations are low. Could they go lower? Of course, but if you went to your favorite restaurant today and paid $20 for a T-bone then when you go back in a couple of weeks and only pay $17, are you upset that you pay less? PROBABLY NOT! The key is to be in the game and just like some of these gurus have cash sitting ready to buy, you should too.
If you work a regular 9-5, don't buy that Hi-Def television, build a position in a company you like. We all have cash flow and this is perhaps the biggest thing we should take from the likes of Warren Buffett (who still lives in the same house he bought 50 years ago) or Eddie Lampert (who lived in a 2 bedroom apartment while he was building wealth for ESL's partners). Frugality should not be treated like a BAD WORD. Instead it should be treated as a path to wealth, if you make the right investment decisions.
For instance, back to the Triple Crown, at the Belmont Stakes there were 7 other horses with odds of 15 – 1 all the way up to 40 – 1. The winner happened to be 38 – 1. So, if you think about Monish Pabrai’s philosophy of focused betting where you win big but don’t lose much, a $1,000 bet on each of these horses would be a $7,000 “investment” and with the winning purse of $38,000 the mispriced “bet” would have yielded $31,000 pure profit. Not a bad one time return. These same types of opportunities are present in the market at all times.
Happy Hunting!! Start here at GuruFocus.com and maybe try http://www.morningstar.com/highlow/getHighLow.aspx to look for 52 week lows that meet your investment criteria.
___________________________________________
Jonathan D. Poland is the Founder & Chairman of the PigsGetRich Investment Network. www.pigsgetrich.com
The old Buffett adage of "be greedy when others are fearful and fearful when others are greedy" can be used in many different areas to make winning bets.
Anytime you have a "sure thing" and everyone else thinks it’s a "sure thing" (like Big Brown who had $6 million bet on him to win outright) it’s bound to disappoint. You pay a hefty price for a rosy consensus.
Now take the opposite end of the spectrum and think about the market of today. I don't typically like to think in terms of the general market however I often find myself asking the question - "is the market more risky or less risky today..." as compared to last year, or 3 years ago??
All you have to do is turn on the news and you'll see widespread pessimism. Looking at the recent 52 Week Lows on Morningstar shows there are some pretty sound franchises that are just beaten down by the market.
Regardless of what happens this year, valuations are low. Could they go lower? Of course, but if you went to your favorite restaurant today and paid $20 for a T-bone then when you go back in a couple of weeks and only pay $17, are you upset that you pay less? PROBABLY NOT! The key is to be in the game and just like some of these gurus have cash sitting ready to buy, you should too.
If you work a regular 9-5, don't buy that Hi-Def television, build a position in a company you like. We all have cash flow and this is perhaps the biggest thing we should take from the likes of Warren Buffett (who still lives in the same house he bought 50 years ago) or Eddie Lampert (who lived in a 2 bedroom apartment while he was building wealth for ESL's partners). Frugality should not be treated like a BAD WORD. Instead it should be treated as a path to wealth, if you make the right investment decisions.
For instance, back to the Triple Crown, at the Belmont Stakes there were 7 other horses with odds of 15 – 1 all the way up to 40 – 1. The winner happened to be 38 – 1. So, if you think about Monish Pabrai’s philosophy of focused betting where you win big but don’t lose much, a $1,000 bet on each of these horses would be a $7,000 “investment” and with the winning purse of $38,000 the mispriced “bet” would have yielded $31,000 pure profit. Not a bad one time return. These same types of opportunities are present in the market at all times.
Happy Hunting!! Start here at GuruFocus.com and maybe try http://www.morningstar.com/highlow/getHighLow.aspx to look for 52 week lows that meet your investment criteria.
___________________________________________
Jonathan D. Poland is the Founder & Chairman of the PigsGetRich Investment Network. www.pigsgetrich.com
