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TO SUMMARIZE OUR THOUGHTS 4/7/2008
It’s difficult to remain steadfast when markets continuously
gyrate, reacting to the media’s flurries of negative headlines and politicians’
sound-bytes. However, it is important to
remember history has proven that panic breeds opportunity. History also has
shown trying to time the markets is a losing proposition; 99% of returns are
made in 5% of the time.
We are investors – not traders. Whether the market is up or down, our goal is
always to find superior businesses at attractive prices. Many times this means buying blue chip companies
that have a problem that needs to be resolved.
More often than not, however, the market will overreact and the price
will fall far below a value that will exist once the company rights the
ship. Of course, we prefer our stocks go
up immediately, but history has taught us we cannot be too concerned about the
timing of our gains. If we believe the
company’s problems are transitory, it is our patience and willingness to endure
some volatility that will pay off handsomely.
In today’s environment, we see opportunity as
virtually all companies have sold off and portfolios can be upgraded. Investors who practice a rational temperament
and a long-term focus have traditionally been able to use declines such as we
are experiencing to their advantage.
Measured against the past recessions of 1973-1974 and 1981-1982, the
worst since the 1930s, 2008 is bupkis.
The stock market’s decline measured against 1973-1974 and 2000-2003 is
very mild. We feel we are facing an
opportunity for future profit rather than a debacle over the next 18 months.
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