Psychology is probably the most important factor in the market – and one that is least understood.
Patience is a crucial but rare investment commodity.
Investors repeatedly jump ship on a good strategy just because it hasn’t worked so well lately, and, almost invariably, abandon it at precisely the wrong time.
We invest in undervalued companies that exhibit strong fundamentals, above-market dividend yields and historic earnings growth, which our analysis indicates will persist. Our strategy is to own strong, fundamentally sound companies and to avoid speculative stocks or potential bankruptcies.
History constantly reminds us that in an uncertain world there is no visibility of prospects. Future earnings cannot be predicted with accuracy.
Experience teaches us that when “everyone” comes to the same conclusion, that conclusion is just about always wrong.
Nobody beats the market, they say. Except for those of those of us who do.
Demanding immediate success invariably leads to playing the fads or fashions currently performing well rather than investing on a solid basis. A course of investment, once charted, should be given time to work out. Patience is a crucial but rare investment commodity.
Favored stocks underperform the market, while out-of-favor companies outperform the market, but the reappraisal often happens slowly, even glacially.
If you have good stocks and you really know them, you’ll make money if you’re patient over three years or more.
I paraphrase Lord Rothschild: ‘The time to buy is when there’s blood on the streets.’
One of the big problems with growth investing is that we can’t estimate earnings very well. I really want to buy growth at value prices. I always look at trailing earnings when I judge stocks.
Analysts have always been overly optimistic.