The Tree of Wealth

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“Somebody’s sitting in the shade today because someone planted a tree a long time ago”
– Warren Buffett

It seems as if the human attention span is on the endangered species list these days. With the rise of the internet and mobile communications, it seems that we all think and communicate in 140 characters or less, and “Long Term” is defined as the next 5 minutes.

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Permanent Crisis

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“Do not resign yourself to this battle. Do not see investing as some kind of Sisyphean exercise, in which you are tragically fated to roll the rock of your wealth up the hill in rising markets, only to watch it roll down again when markets crash. Believe that you can triumph, and that all you need in order to succeed beyond your wildest dreams is out there – lost in the darkness of ignorance and fear – waiting for you to shine a light on them.”
– Nick Murray

The US stock market has been in an impressive bull market for the last year or so, which has taken many investors by surprise. In fact, the recent run in stock prices has been called “the most hated bull market in history”, as many investors don’t trust the market these days, or believe the reasons why it is increasing.  More →

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Great Investors have a Healthy Memory

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Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.”
– Sir John Templeton

In last month’s article, we focused on “being observant” as one of the great qualities to adopt for anyone who wants to become a great investor. This month we focus on a similar, but slightly different quality…Great Investors have a Healthy Memory

There is great wisdom in John Templeton’s quote above, as it recognizes investor sentiment as an enormously important factor in stock market cycles.  In our view, long term market cycles are largely dictated by “the mood of the crowd”, and great investors are well served to pay attention to investor sentiment.  To paraphrase Templeton, we have a belief that no great, multi-year bull market can begin unless the majority of the investing public is terrified of losing money in stocks, and that their equity holdings can tank at any moment, and for any reason.  Alternatively, no terrible bear market can occur unless investors are complacent, and convinced that stocks can’t go down at all, and that their greatest risk in their stock portfolios is that someone else is earning bigger returns than they are.
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Investing vs Trading

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When we turn on the TV, we’re expecting to be entertained on some level. It doesn’t matter if it’s HBO or CNBC. Now, we may not think about it that way, but producers focused on attracting eyeballs. I always remind myself that there is an entertainment element to the Financial ‘news’.  It isn’t meant for investors, but for traders, people who believe speed is paramount.

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