Market is going through lot of ugliness (selloff) over the past couple weeks, which means a few of my stocks are starting to fall further in price, which doesn’t mean they can’t fall further, of course, I have no idea whether we will see a “down 30%” October or a market crash in the next six months, still though, some perspective is always helpful… we are not exactly in a “freefall,” as the headline writers like to claim (the market is back to roughly where it was in June, and even after a wild 18 months or so the broad market is now only down about 7% from the absolute peak at the end of 2021… 9%, if you use the Nasdaq 100 instead of the S&P 500).
And if you want to try to reset yourself as a valuation-focused investor, thinking about what a company is worth to you rather than what the stock price is doing today, I heartily recommend going back and reading all of the Buffett Annual Letters, all of them since 1977 are easily available online, and— some of the things he talks about can seem a little antiquated, and the letters occasionally reference investments that were important to Warren at the time but seem silly and irrelevant in retrospect, but they’re all well-written and engaging, none are particularly long, and many are full of little gems of wisdom. One of the benefits of going back in time a bit to read those letters from the 1970s and 80s is that in the earlier days, Buffett could act much more like you or I, buying and selling much smaller companies than the giants he is largely restricted to owning today. And thinking about how he was making decisions when he bought those stocks is a good way to reinforce the part of you that wants to be patient, and wants to have a long time horizon — some of those investments that he has talked a lot about over the years turned into huge successes like American Express, or Coca Cola, and those companies pay Berkshire far more in annual dividends or earnings today than Warren paid to buy Berkshire’s initial stake decades ago.
Most of us won’t look back in our 70s or 80s (or 90s, if we’re as fortunate as Buffett and Munger), and regret the investments we held on to for decades… we will regret those companies we remember owning but failed to hold, the stocks which seemed a little boring at the time, or seemed to be hitting speedbumps that made us want to sell, or got foolishly overvalued for a little while in whatever the mania of the day was, making us happy to feel like we were selling at the top, but which outfoxed us and became much larger companies over time, great machines of compounding value over decades. It’s hard to be patient or disciplined in investing, and we will all make mistakes along the way, leading to regret and embarrassment, but most of the real lessons of the investing world tell us that it’s worth the effort.
So be patient and have long time horizon. Stay positive and stay tuned…
Busy And Useful 