Hurray! Another decline, and everything's on special
Stop pretending the big falls on the markets is bad news! There is nothing that makes an investor's heart sing more than seeing his favourite stocks becoming affordable and fairly priced again. Too long we have suffered from a market that seemed to just run away for no fundamental reasons. If you missed the boat on the good stocks in March 2003, you would have to wait for a big decline to buy them. That big decline is now underway.
There'll be those who'll accuse me of cheerleading - of talking up the market at a time when everything is heading south. I'm not here to talk anything up or down, nor to give you specific investment advice. But to quote the most famous value investor of them all, Warren Buffett, "when everybody's buying, I'm scared. When everybody's scared, I'm buying". The fact of the matter is that value investors sold out of this market long ago, when valuations started to get way ahead of themselves. Goh Eng Yeow used the following words in this morning's Straits Times: "frenzied, fear-driven bail-out".
He's right, it is a frenzied, fear-driven bail-out. But that's precisely the reason to see light at the end of the tunnel.
Here's another, from my good friend Song Seng Wun from CIMB-GK: "Irrational fear is stalking regional markets. Fundamentally, things haven't changed, and the economy is humming along nicely".
THAT, my friends, should have been the headline in the press!
Instead we got "STI plunges 6% in worst one-day fall since Oct 1987". Sure it's true, and it is certainly no fun if you're fully invested. My argument is, value investing allows you to sleep well at night because you buy when things are cheap – no matter how scared everybody is – and you sell when things are expensive – no matter how jubilant everybody is.
Attention is now turning to where the bottom of these big declines are. Again, I'm not going to give you specific investment advice. But value investors will recognise the bottom when they see fundamentally sound companies trading at fair prices, no matter what the headlines say.
Mark Laudi
ArchivesThere'll be those who'll accuse me of cheerleading - of talking up the market at a time when everything is heading south. I'm not here to talk anything up or down, nor to give you specific investment advice. But to quote the most famous value investor of them all, Warren Buffett, "when everybody's buying, I'm scared. When everybody's scared, I'm buying". The fact of the matter is that value investors sold out of this market long ago, when valuations started to get way ahead of themselves. Goh Eng Yeow used the following words in this morning's Straits Times: "frenzied, fear-driven bail-out".
He's right, it is a frenzied, fear-driven bail-out. But that's precisely the reason to see light at the end of the tunnel.
Here's another, from my good friend Song Seng Wun from CIMB-GK: "Irrational fear is stalking regional markets. Fundamentally, things haven't changed, and the economy is humming along nicely".
THAT, my friends, should have been the headline in the press!
Instead we got "STI plunges 6% in worst one-day fall since Oct 1987". Sure it's true, and it is certainly no fun if you're fully invested. My argument is, value investing allows you to sleep well at night because you buy when things are cheap – no matter how scared everybody is – and you sell when things are expensive – no matter how jubilant everybody is.
Attention is now turning to where the bottom of these big declines are. Again, I'm not going to give you specific investment advice. But value investors will recognise the bottom when they see fundamentally sound companies trading at fair prices, no matter what the headlines say.
Mark Laudi
Labels: CIMB-GK, Goh Eng Yeow, market falls, Song Seng Wun, Straits Times Index
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