A few months ago, while a lot of investors thought the market had a lot of bargains, Jean-Marie Eveillard did not think so. Now he is saying that as investors with a long-term perspective, equities are beginning to look attractive. Read his letter to shareholders.
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We'll be clear that we are rather concerned with the unintended consequences of the actions taken by authorities so far. But we also believe firmly that such action will be taken--no matter what--to prevent either a '30s style depression or an extended Japan-style malaise. In that case we believe there is approximately zero chance of either scenario, while also conceding that we will face difficult economic times nonetheless. A credit bust is never painless. And the dollar may well lose its shine as the world’s reserve currency, hence our continuing position in gold.
With that said, though from a macro standpoint things look grim, the good news is that since we have some excess cash we are able to buy securities at somewhat peculiar prices--thus the spectacle of Shimano's shares trading at 8x cash-adjusted earnings after having fallen by half in three months, 3M's at 9x earnings, Pargesa's at close to our first purchase price 6 years ago, and Nitto Kohki's shares at 2x cash-adjusted earnings. As investors with a long-term perspective, equities are beginning to look attractive, even as corporate profits come under pressure.
We are focusing on the types of companies we always have--a combination of “cigar butts” (as Warren Buffett called Benjamin Graham-type stocks) and some truly exceptional businesses trading at fire sale prices. Sometimes when investing seems most scary it's the best time to invest. This may be one of those times.
Read the complete letter
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We'll be clear that we are rather concerned with the unintended consequences of the actions taken by authorities so far. But we also believe firmly that such action will be taken--no matter what--to prevent either a '30s style depression or an extended Japan-style malaise. In that case we believe there is approximately zero chance of either scenario, while also conceding that we will face difficult economic times nonetheless. A credit bust is never painless. And the dollar may well lose its shine as the world’s reserve currency, hence our continuing position in gold.
With that said, though from a macro standpoint things look grim, the good news is that since we have some excess cash we are able to buy securities at somewhat peculiar prices--thus the spectacle of Shimano's shares trading at 8x cash-adjusted earnings after having fallen by half in three months, 3M's at 9x earnings, Pargesa's at close to our first purchase price 6 years ago, and Nitto Kohki's shares at 2x cash-adjusted earnings. As investors with a long-term perspective, equities are beginning to look attractive, even as corporate profits come under pressure.
We are focusing on the types of companies we always have--a combination of “cigar butts” (as Warren Buffett called Benjamin Graham-type stocks) and some truly exceptional businesses trading at fire sale prices. Sometimes when investing seems most scary it's the best time to invest. This may be one of those times.
Read the complete letter
