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With the recent volatility experienced by Mr. Market’s violent mood swings, investors may have been left in shell-shocked mode. These violent episodic mood swings can be likened to what occurred last October 2008 with the collapse of Lehman Brothers, and as the market digested the possibility of the collapse of the global financial system. Back then, the market had begun a nightmarish tailspin into the depths of depression, and valuations had hit a nadir (at least, for some of the companies I was eyeing back then). So there is some truth to the adage that investing is best when pessimism is at its peak, as it creates situations whereby superb and advantageous valuations arise on well-run, fundamentally-sound companies !
During such times, it is important to have a sound investment philosophy and criteria with which to rely on in order to make investment decisions. It used to be the case that a few years ago, before my value investing days, I was still stumbling around in the dark trying to ascertain if I should trade, contra or invest ! I had no guidance and was not aware of what was going on out there, and that is a very dangerous situation indeed. Of course, I lost some money along the way and made the classic mistakes which most “newbies” make, which I have detailed down under my “Investment Mistakes” category. Fortunately, I did not have to try out and get burnt by warrants and shorting for me to realize that those were extremely risky speculative activities which could have landed me in hot soup ! So it actually pays to learn from others’ mistakes instead of making your own. Read more...[caption id="attachment_2473" align="alignright" width="150" caption="Photo by Ravenelle"][/caption]
With the recent volatility experienced by Mr. Market’s violent mood swings, investors may have been left in shell-shocked mode. These violent episodic mood swings can be likened to what occurred last October 2008 with the collapse of Lehman Brothers, and as the market digested the possibility of the collapse of the global financial system. Back then, the market had begun a nightmarish tailspin into the depths of depression, and valuations had hit a nadir (at least, for some of the companies I was eyeing back then). So there is some truth to the adage that investing is best when pessimism is at its peak, as it creates situations whereby superb and advantageous valuations arise on well-run, fundamentally-sound companies !
During such times, it is important to have a sound investment philosophy and criteria with which to rely on in order to make investment decisions. It used to be the case that a few years ago, before my value investing days, I was still stumbling around in the dark trying to ascertain if I should trade, contra or invest ! I had no guidance and was not aware of what was going on out there, and that is a very dangerous situation indeed. Of course, I lost some money along the way and made the classic mistakes which most “newbies” make, which I have detailed down under my “Investment Mistakes” category. Fortunately, I did not have to try out and get burnt by warrants and shorting for me to realize that those were extremely risky speculative activities which could have landed me in hot soup ! So it actually pays to learn from others’ mistakes instead of making your own. Read more...
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With the recent volatility experienced by Mr. Market’s violent mood swings, investors may have been left in shell-shocked mode. These violent episodic mood swings can be likened to what occurred last October 2008 with the collapse of Lehman Brothers, and as the market digested the possibility of the collapse of the global financial system. Back then, the market had begun a nightmarish tailspin into the depths of depression, and valuations had hit a nadir (at least, for some of the companies I was eyeing back then). So there is some truth to the adage that investing is best when pessimism is at its peak, as it creates situations whereby superb and advantageous valuations arise on well-run, fundamentally-sound companies !
During such times, it is important to have a sound investment philosophy and criteria with which to rely on in order to make investment decisions. It used to be the case that a few years ago, before my value investing days, I was still stumbling around in the dark trying to ascertain if I should trade, contra or invest ! I had no guidance and was not aware of what was going on out there, and that is a very dangerous situation indeed. Of course, I lost some money along the way and made the classic mistakes which most “newbies” make, which I have detailed down under my “Investment Mistakes” category. Fortunately, I did not have to try out and get burnt by warrants and shorting for me to realize that those were extremely risky speculative activities which could have landed me in hot soup ! So it actually pays to learn from others’ mistakes instead of making your own. Read more...
