It's been quite a while since I've written an article, and for that...I'm sorry! The past few weeks have had me extremely busy — reading, researching, and ripping apart companies. We've made a few investments this quarter, but I haven't had time to write about any of them here.
Still, this "value investing" stuff works. And though we've only been going two years, if you don't believe by now that buying good businesses on the cheap and ignoring the markets is the way to go, it will probably never sit right with you. As Buffett says: You either quickly get the concept of buying $0.50 dollars, or you never do. Let's jump into some interesting questions from visitors, and concepts in intelligent investing.
Did You Miss The Recent Rally?
Two of the great things about intelligent investing are:
Think about that for a second. If you're lamenting the fact that you weren't fully invested in March and you missed the rally — that you "missed your chance" — think about who is promoting that idea, and then remember back not only to March, but to the dot-com bubble, burst, and recovery.
When the markets are flying high, they say that you have to get in — you're missing the action. When the markets are at their lows, you should "keep some powder dry" because they're going lower. Then, a massive recovery comes and everyone says, "We told you to buy! You missed the action!"
Interestingly enough, it's the same people that scream, "Get in! Stay in cash! We told you to get in!" They don't put a guy like me on television because I' not fast and actionable.
Reporter: Joe, what should investors do today?
Joe: Buy assets for less than they're worth.
Reporter: But the markets are [up/down] 40% in the last year, and you said that a year ago!
Joe: Yep.
Reporter: Thanks for another scintillating interview.
I won't name names, but it's all garbage. When I talk about Rose in the book, I mention some of the crazy markets she saw — up 40% in a year, down 50% in a year. Rose never concerned herself with the markets. She never timed anything. She paid good prices for good businesses, and ended up a wealthy woman.
But It's Different This Time!
Bull.
The "September Event" that occurred after Lehman Weekend was different that anything we've seen in 80 years. But that's behind us now (it was behind us a while ago). And even still — had the world economy stopped completely, had everything collapsed, your money market, your stocks, your gold ETFs — all worthless. Even those gold bars they're selling on television — they'd only be as good as the ammo you have to protect them.
If you're still looking for the end of capitalism and wondering how to profit from it, get in the ammo business. Otherwise, keep looking for good businesses at cheap prices.
At this point, the economy is still ugly. Unemployment is still rising. Foreclosures. Volatility. Inflation or deflation — take your pick. Rates will go up in the future, putting added pressure on stocks. These things — all of these things — we've been through them before, in varying degrees.
It's not different, it's just scarier because the internet and the media throw it in our faces more often than they could twenty years ago. And our next crisis, whenever that may be, will seem even more dire and hopeless because we'll have more information from more sources, adding to the fear and confusion.
Is everything we're seeing now unprecendented? Yes. But it doesn't change the game. It's not "different."
The markets work. Definitely not on a daily basis. Sometimes not even on a yearly basis. But over the long run, an asset purchased on the cheap will usually work out just fine regardless of whether or not we "retest the lows" or hit Dow 10,000 before the end of the year.
Still, this "value investing" stuff works. And though we've only been going two years, if you don't believe by now that buying good businesses on the cheap and ignoring the markets is the way to go, it will probably never sit right with you. As Buffett says: You either quickly get the concept of buying $0.50 dollars, or you never do. Let's jump into some interesting questions from visitors, and concepts in intelligent investing.
Did You Miss The Recent Rally?
Two of the great things about intelligent investing are:
- you never "miss the boat" because there's always going to be another boat, and
- your results, though volatile, will be largely independent of the market's returns.
Think about that for a second. If you're lamenting the fact that you weren't fully invested in March and you missed the rally — that you "missed your chance" — think about who is promoting that idea, and then remember back not only to March, but to the dot-com bubble, burst, and recovery.
When the markets are flying high, they say that you have to get in — you're missing the action. When the markets are at their lows, you should "keep some powder dry" because they're going lower. Then, a massive recovery comes and everyone says, "We told you to buy! You missed the action!"
Interestingly enough, it's the same people that scream, "Get in! Stay in cash! We told you to get in!" They don't put a guy like me on television because I' not fast and actionable.
Reporter: Joe, what should investors do today?
Joe: Buy assets for less than they're worth.
Reporter: But the markets are [up/down] 40% in the last year, and you said that a year ago!
Joe: Yep.
Reporter: Thanks for another scintillating interview.
I won't name names, but it's all garbage. When I talk about Rose in the book, I mention some of the crazy markets she saw — up 40% in a year, down 50% in a year. Rose never concerned herself with the markets. She never timed anything. She paid good prices for good businesses, and ended up a wealthy woman.
But It's Different This Time!
Bull.
The "September Event" that occurred after Lehman Weekend was different that anything we've seen in 80 years. But that's behind us now (it was behind us a while ago). And even still — had the world economy stopped completely, had everything collapsed, your money market, your stocks, your gold ETFs — all worthless. Even those gold bars they're selling on television — they'd only be as good as the ammo you have to protect them.
If you're still looking for the end of capitalism and wondering how to profit from it, get in the ammo business. Otherwise, keep looking for good businesses at cheap prices.
At this point, the economy is still ugly. Unemployment is still rising. Foreclosures. Volatility. Inflation or deflation — take your pick. Rates will go up in the future, putting added pressure on stocks. These things — all of these things — we've been through them before, in varying degrees.
It's not different, it's just scarier because the internet and the media throw it in our faces more often than they could twenty years ago. And our next crisis, whenever that may be, will seem even more dire and hopeless because we'll have more information from more sources, adding to the fear and confusion.
Is everything we're seeing now unprecendented? Yes. But it doesn't change the game. It's not "different."
The markets work. Definitely not on a daily basis. Sometimes not even on a yearly basis. But over the long run, an asset purchased on the cheap will usually work out just fine regardless of whether or not we "retest the lows" or hit Dow 10,000 before the end of the year.
