Warren Buffet is regarded as the greatest investor of all time. He is also credited with some of the best sayings and clichés as highlighted in his book “Warren Buffet Speaks”. Over the years we have coined and heard some sayings that we believe are applicable to investors today, and this week we share some of those here and our own interpretation.
“Watch like a hawk and pounce like a mongoose”
We monitor ASX announcements on a daily basis. Throughout the year we meet with hundreds of companies to understand their business models and the potential catalysts for the stock to re-rate. Watching like a hawk means keeping well informed on the companies in our investment universe, while pouncing like a mongoose means being ready to identify the right opportunity to take a position and then doing so swiftly at the right time.
“Feed the ducks when they’re quacking”
While we are not sure who actually coined this phrase, it is one of our favourites! Selling is one of the more difficult parts of investing as generally an investor’s focus is biased on the upside rather than the downside. So although we follow a fundamental based process before closing out our investment positions, we do adhere to the notion that when too many investors are willing to buy our shares, we should probably let some go and bank the profit.
“The first upgrade is never the last”
We always believe that businesses or at least their share prices are carried by market momentum. Therefore companies with positive momentum that upgrade investor expectations will tend to follow on by further good news in the short term. Having said that, the opposite also applies...
“Bad news comes in threes”
Similarly to the above saying, we often see negative momentum in businesses announcements on a regular basis . Therefore companies that update the market with bad news, tend to have further bad news to follow. For some unknown reason, these negative updates tend to come in threes! Strange but true.
“Shoot first, ask questions later”
This is an investment cliche that investors should pay particular attention to. Over the years we have discovered that in most instances, companies that provide negative news to the market, initially get sold off on the first few days with significant amount of liquidity. Once liquidity dries up share prices tend to drift lower even further, as investors realise the magnitude of the negative news or more concerns emerge. We take the view that in most cases, investors are better off to “shoot first” (sell), then take the time to analyse the situation thoroughly, and reassess whether they want to own the company once again. If you would like to get back into the position you can always buy in at a later stage.
“It’s always darkest before the dawn”
There is always a point in time for a company that has disappointed, where investors think the worst of all possible outcomes. It is this point of maximum pessimism, where we feel are the best opportunities - to buy into a business that is fundamentally sound - yet experiencing some short term issues. Remember markets are a collective of a mass of human emotion so when everyone has capitulated it can often pay to own the investment.
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TAMIM Asset Management provides general information to help you understand our investment approach. Any financial information we provide is not advice, has not considered your personal circumstances and may not be suitable for you.