What should YOU do?
What are OTHER people saying that you should do? Don't you find it confusing at the moment? We seem to be evenly split between the effects of money printing and central bank support, and the reality that the economy (even if a vaccine is developed today) is badly hurt.
I will start by with a short comment on Warren Buffett's AGM over the weekend. The most striking to me is this: Whilst he extols the virtues of the American economy and why you should not bet against it, he HAS NOT been a big buyer of stock. He even sold his entire position in US airlines at a loss!
Even more interestingly, he was buying back shares of Berkshire Hathaway before the crisis because he felt it was undervalued, but strangely, now that it is 20% lower in price, he does not think it is undervalued.
Remember, over- or undervaluation is in relation to an estimate of intrinsic value. Is it possible that Buffett thinks the intrinsic value of BRK has changed drastically in the last 2 months? Such that even with a 20% correction in PRICE, it is not undervalued because INTRINSIC VALUE has dropped so much. And the only way IV can change so dramatically in such a short time is if fundamentals / business models have changed tremendously.
So we have Buffett, wiser than many of us NOT bullish (I wouldn't say he is bearish, but he certainly does not appear to be bullish), Gundlach and many other smart investors bearish, Musk tweeting his stock is too high etc. Ackman talking his book at the low, not sure if he is bullish anymore.
With that, I want to share a short story from 1 Kings 13. It's a "strange story". Summary:
- Prophet A goes to prophesise against King Jeroboam, the prophecies come true. He is a real prophet.
- Jeroboam asks Prophet A to stay and rest but P. A says God has told him not to rest but to go home by another way immediately.
- On his way, Prophet B hears about the incident and persuades P.A to stay. P.B is an older guy, presumably wiser and more experienced.
- P.A initially replies that God has told him not to stay, but P.B says God has told him to tell P.A to stay. And so P.A listens to P.B and stays.
- P.A leaves the next day, and is mauled by a lion on the way home.
I told you it was a strange story right?
I honestly don't think P.B was out to trick P.A because B went to bury A and even wanted to be buried beside A when B dies.
My takeaway is this:
And seek the Lord for YOURSELF and listen to what He is saying to YOU. What YOU need to do in the current climate.
There will be no shortage of experts saying this and that, whether the market will go up or down. These are just VIEWS, not facts. Nobody knows what will happen in the future.
So don't be fixated on what the market will do next.
Release yourself from the attachment of wanting to buy at the absolute low or near it.
For me personally (may not be the case for you), it has been to:
1. Find great investments that are either (1) Deep Value or (2) Compounders.
2. For the Deep Value investments, can I see it double within the next 3 years? For the compounders, can I see it producing sustainable ROIC for it to 10X in 10 years?
3. Have I done my study of the fundamentals of the company and calculated its Intrinsic Value?
4. Based on current prices, is it giving me the return I am looking for?
5. If no, move on. If yes, invest.
6. Be still.
I have a free training video on the website that you can check out, or just send me a message if you want a quick chat.