18 Sept 2016
Dear Fellow Investor,
In times of fear, pessimism and uncertainty it always pays to review the wisdom of Warren Buffet, the world’s greatest investor.
When Warren Buffett gets into a discussion of investing philosophy, he reminds us all that most investors are blinded by the markets’ gyrations and spend far too much time trying to form macro opinions or listen to market predictions; rather than investing simply and prudently for the long-term. “Too often, owners of stocks let the irrational behaviour of their fellow owners cause them to behave irrationally. Because there is so much chatter about markets, the economy, interest rates, price behaviour of stocks, etc, some investors believe it is important to listen to pundits and, worse yet, important to consider acting upon their comments. You don’t need to be an expert in order to achieve satisfactory investment returns. But if you aren’t, you must recognize your limitations and follow a course certain to work reasonably well. Keep things simple.
Weekly Dow Jones with last weeks price holding at 18000 support. Notice the ultra high volume on the last price bar to the right as attempts to drive prices lower failed. Price was up 38 points for the week. The whole investing world is focusing on the Dow. In my opinion this is short term noise.
Another example of why we need to heed Warren Buffet’s advice is Apple shares:
Other negatives included declining revenue, lack of innovation, no more a growth company, dropping the self-drive car venture etc.
The average Joe if he or she listened to CNBC, CNN or Bloomberg would have dumped their shares bought put options or short sold.
Look at the right edge of the Apple chart on last week’s price action. It was an ultra-high volume wide range price bar cleaning out the short sellers and misinformed experts.
Warren Buffet bought 3 billion USD of Apple shares in May and June and I am sure he followed his own advice and is still holding.
For Tim Cook to cut his losses on self-driving cars is a smart move. Cars are not his strong suit. He said he will focus on his core hand phone business. The market reacted negatively to his move in June but again this was a short term panic reaction. It is always smart to cut losses on something that is not working.
The best businesses in Malaysia/ Singapore are those with flexible management like Tim Cook who innovate, manage their financials and keep a low profile. They tend to reward their shareholders with rising dividends, sales and earnings . I focus on these shares for my clients. I am not concerned with irrational moves in other markets such as the Dow.
Invest well and grow your wealth,
Bill
This comment has been removed by a blog administrator.
ReplyDelete