Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”
In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.
Let me be clear on one point : I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month or a year from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.
The best thing is to learn from other guy’s mistakes. Patton used to say, “It’s an honor to die for your country ; make sure the other guy gets the honor.” There are a lot of mistakes that I’ve repeated. The biggest one, the biggest category over time, is being reluctant to pay up a little for a business that I knew was really outstanding.
The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.
We continue to make more money when snoring than when active.
Most institutional investors in the early 1970s, on the other hand, regarded business value as of only minor relevance when they were deciding prices at which they would buy or sell. This now seems hard to believe. However, these institutions were then under the spell of academics at prestigious business schools who were preaching a newly-fashioned theory : the stock market was totally efficient, and therefore calculations of business value – and even thought, itself – were of no more importance in investment activities. (we are enormously indebted to these academics : what could be more advantageous in an intellectual contest – whether it be bridge, chess, or stock selection – than to have opponents who have been taught that thinking is a waste of energy?)
People will always try to stop you doing the right thing if it is unconventional.
You know… you keep doing the same things and you keep getting the same result over and over again.
The lower prices go, as long as you know the company you’re investing in, the better it is for a buyer. Down days always make me feel good.