I’ve been very busy at work over the last two weeks so I haven’t had a chance to comment on this crazy market volatility. When will it stop? Will the EU collapse? Will we have to convert to a barter system? Will Warren Buffett ever pay higher taxes than his secretary? I don’t know. What I do know is that times like these separate the wheat from the chaff. This is the time to look for bargains in the market. Has anything hit your buy price? In markets like these when everything is correlated, the price could keep coming down, so patience when buying or nerves of steel when holding becomes absolutely necessary.
This is also a good time to review your current holdings. I’ve received a few emails from readers asking if they should sell something they own. My responses have generally been along the lines of “as anything changed with the companies?” and “Are your value estimates still roughly correct?” The next few quarters may be bad, but the key is the outlook for the long term fundamentals of the business. If you bought with a large margin of safety, it helps protect the downside, but when Mr. Market goes crazy, you can have a (paper) loss on your investment.
I have bought a few stocks in the last couple of weeks and I hope to write a detailed analysis on a couple of them soon. One that I won’t be writing about is Berkshire Hathaway (BRKB). Its probably been analyzed and written about more than any company in America and nothing I write could add much to the debate (The Rational Walk’s analysis is the most thorough report I’ve ever read on Berkshire-anyone considering a purchase should read it). All I can say is that I was able to buy a phenomenal group of companies managed by the world’s greatest investor at very close to book value. While it may not be a multi-bagger, I feel better in this investment than most mutual funds out there.
Here are some interesting links for you:
- The Reformed Broker has some advice on surviving a crash.
- Whopper updates us on AEY‘s quarterly earnings. I agree with his conclusion. I also think that with the telcos invading their turf, cable companies will need to increase capex sooner rather than later benefiting AEY.
- Frank reminds us to always watch your rear.
- For those of you starting out or veterans needing a refresher on value investing, Richard Beddard has a great series, starting here.
Disclosure: Long BRKB and AEY