Forum Archive Index - March 2003

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Macdunk,


Sorry no predictions which way 'the market' is going from me, but 
I can tell you why I don't make predictions.


> 
>  We investors need bad times in order to have great times.  
>


I agree with that.  But I don't have to predict the bad times.  I can 
simply wait until bad times come and then buy things if they are 
cheap enough. 

I don't care which way the market is going.  I will buy in uptrends. 
I will buy in downtrends.  Sure if you end up buying in a downtrend 
the price may go lower, but I'm not too concerned about that.  I 
don't believe I can pick the bottom price for a share.  I wouldn't 
even consider buying a share I wasn't prepared to hold for two years. 
so short term fluctuations mean nothing to me, *provided* I buy 
in cheaply enough.


>
> My way of thinking is invest into good solid companies,
>


Just like when I invest in a term deposit I put it into a good solid 
financial institution.  If you don't invest in something 'good and 
sold' you might as well just go to the casino.


>
>  I expect the market to soar after the first shots are fired 
>( any day now), and the moment its over to go into bull mode.
>


A brave prediction!  The first bit won't surprise.  The last bit 
needs some careful clarification.  I doubt if we'll see another bull 
market like the one that Clinton oversaw in the 1990s in the USA.   
At least, not in the lifetime of anyone reading this post now!  I'd 
say the 1990s were a once in a hundred year event.

History has shown that sharemarket behaviour  usually 'regresses to 
the mean'.   This means much lower inflation than we have now, a 
growth rates of say 5% at most in bull market years, with bull 
markets running for three to five years max.



>
>To all the financiers and advisors that have told us to invest in
>lots of companies overseas and everywhere and spread the risk I
>thought you were idiots then, and convinced of it now. 
>



I wonder if you were starting a chain of jewellery stores whether you 
might open a few in New Zealand first or 'spread your risk' and open 
one in Auckland, one in London, one in Tokyo one in San Francisco one 
in Iceland and one in Timbuktoo?  Clearly the latter is the better 
option because overseas people run shops better - right ;-P?

Personally I think the way to lower your risk is to understand your 
businesses better.   If you can buy a good business cheaply, it 
shouldn't matter where that business is located.

SNOOPY



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"You can tell me I'm wrong twice, 
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