Mi intención al abrir el hilo e ir poniendo sus reflexiones, no es que la gente siga su método a pies juntillas ni crear un ídolo al que adorar, sino hacer pensar sobre nuestra forma de invertir. Porque me parece que sus ideas son muy válidas y llenas de sentido común. Además, seguir su estrategia en Europa no es tan sencillo porque vivimos en euros y aquí las empresas no son tan consideradas con el accionista receptor de dividendos.
Yo sé que ahora mismo, a diferencia de cuando operaba con fondos, tengo un sesgo USA que tendré que paliar de alguna manera. Pero hasta que crezca más mi cartera tengo tiempo de encontrar alguna solución satisfactoria. Porque no me preocupa en exceso de momento, sin embargo es cierto que es un riesgo añadido que la moneda sea distinta; solo espero que sea tan poco probable que afecte en exceso como lo ha sido en el pasado.
Bueno, a lo que venía es a poner otro comentario suyo que ahonda en primero pensar de manera adecuada para esta forma de invertir, lo importante del largo plazo y cómo somos nuestro peor enemigo en el corto plazo:
Robert Schiller has been telling us that the market is dangerously high and that the only two times the market was valued as highly as it is now, a significant correction followed. What is Schiller’s advice? Do not sell.
Warren Buffett said he has lost faith in IBM and has sold 1/3 of his position. What is Buffett’s advice? He’s not selling anymore at these prices.
Both had negative views, both said don’t sell now. Does that scan? Does that make any sense at all?
We have people in this very comment stream that are down on companies they themselves won’t sell. Why is that? Why is it that people who lose confidence in a company, and are so convinced that the outlook for said company is dire, only trims a small portion of that position and then holds on to the rest? What causes that thought process? If one loses confidence in a company, why don’t they sell it all in one swoop? Why do they play both ends towards the middle?
As investors we create most of our own problems. We are often indecisive when things don’t work out quickly. It’s funny how people will find excuses to buy something and then look for excuses to sell.
When I read some of the comments regarding companies that have under-performed, and how quickly people will discard them when they face adversity tells me they haven’t studied the historical performance of the companies they buy, they merely looked at a FAST Graph or some similar chart to see how a company did share price wise during recessions and how they rebounded and say yeah, let me git some, this company is a survivor.
People will throw up MO’s long term performance, it has been the single most successful long term investment of any other company out there, but most of you never would have been around for it. MO would show periods of lower earnings, lower revenues, making acquisitions and spin offs that made no sense to you. The government stepping in and trying to put MO out of business totally surely would have had most of you long gone, perhaps myself too at the time. Most of you would have come back and said, I sold my MO 3 or 4 years ago and what I bought has done much better and I’m glad I sold MO. And everyone one of you would have been wrong because longer term MO caught up to them and then left them in the dust. Some of you will even try to justify why you might have held but then I see where you jettison other under-performers with much less problems because you don’t like some of the decisions they have made the last few years.
Every company you own had periods where they would have made decisions you don’t like or understand. Sell everything! Equity investing isn’t for you. You are going to get crushed in the next significant recession and the fact that everything is dropping so it’s okay isn’t going to work. Why? Because most of the companies you own are going to show lower earnings, they are going to show declining revenues, share prices are going to drop at an accelerating pace and every talking head on the boob tube and nearly every article on SA is going to be screaming, head for the hills. The sheer number of negative people you listen to or read about will break your resolve, will cause you to sell at a time when you shouldn’t. It’s inevitable unless you learn to manage your emotions and manage your expectations.
Shiller doesn’t expect high market returns going forward, but he doesn’t recommend selling either. Buffett doesn’t think IBM is a high conviction company any more, but he too doesn’t recommend selling now. I don’t think TGT is a better investment than COST, but I’m not selling TGT and I am buying COST. I don’t think IBM is a great investment, but I do think they are a great dividend payer. I’m not looking for high expectations with regard to share prices, I’m looking to get paid well while these financially strong companies attempt to work through their problems just as every company you own had to work through problems of one sort or another at some point. You just didn’t realize it because you weren’t invested in them at the time, and you wouldn’t have benefited from the success of them overcoming their adversities because you wouldn’t have held long enough to do so.
Buy high conviction companies only, and if you do that, then you are more willing to hold as opposed to run when the company goes through another down business cycle where they need to adjust, to adapt, to make the moves necessary to turn it around even if that means changing the CEO. All of this takes time, sometimes more time than a lot of you are willing to allow because you are too short term oriented.
If you think you are smart enough to time those moves, all I can say is … Ha!
I don’t know who is going to turn out to be a great investment and who isn’t. All I know is that I can’t pick 100% winners in the short to intermediate term. All I know is that I do have the ability to manage losses though. In the past 7 or 8 years I’ve only had one full position or overweight position lose money, Just one out of 60 holdings! I do have 5 or 6 holdings showing a loss out of 60, but those positions are small, none more than a 1/2 sized position, so if they don’t work out, I will minimize my losses.
I don’t build up positions to size unless I’m averaging up. When averaging up I’m always in the green, I’m not staring at full positions in the red. You’d be surprised the psychogical difference between the two scenarios. Start small and average up on your winners and you can eliminate a lot of the problems you face in your own portfolios going forward.
Think about it!