STORM Approaching: Execute THIS!
There are many essential attributes implemented by superior investors. Most of them require time and practice to master. In the next 20 months, I’ll highlight one attribute at a time, including case-study examples, so that in two years, you’ll be a world-class investor.
I guarantee that not only will your investment results improve substantially, but you’ll also see measurable achievements in your current vocation, in your family life, in your social activities, and quite possibly, with your overall state of mind.
My objective is to transfer ideas to you, which will feed your mind and make you better, no matter what.
My second goal is to show you that these 20 characteristics are the reason for the billions made by Warren Buffett, Ray Dalio, Howard Marks, Seth Klarman, and every great investor, who has generated consistently superior yields, not a lucky streak.
The last objective of these 20 letters, which will span over the next 20 months, is to show you that these are attainable and completely within your reach.
The best way to prove to yourself that the principles we’ll expand upon don’t require any inherited DNA trait or a genius to put them into work is to apply them, as a way of life, immediately.
Today’s concept will make you a far better investor and truly much more satisfied, as a person, since it will put you back in the driver’s seat.
PATIENT BARGAIN HUNTING
The two most powerful weapons of investors are patience and time.
From now on, I want you to think of the stock market as an actual market, bustling with people. Each person represents a stock, a bond, a property, a cryptocurrency, a mineral, or any item that is for sale.
The market, at every given second, is shouting out prices, but you don’t have to do anything, but listen. The beauty of patient bargain hunting is that you can sit and wait until someone screams a price that makes your head turn.
That’s when you become interested.
Imagine that you come to this market on Monday and don’t get excited about a person shouting “Intel $53.” Well, on Tuesday, the following day, there’s absolutely no reason for you to get enthused about “Intel $54.6.” Yet, most investors take rising prices as a sign that the item for sale is better than yesterday. They chase it.
Unless a fundamental improvement in the underlying asset occurs, never pay more.
A patient bargain hunter waits until the person screaming is ready to fold the tent and go home in shame because he can’t sell his merchandise. In fact, even then he waits, until this person comes to him and asks him if he’d be willing to buy because he’s had a rough day at the market and has no food to put on the table.
You want to find bargains, and they only exist where sellers are distressed or ignorant of what they own (underestimate its worth). Therefore, ignore all else, if you want superior results.
This literally means that 90% of the time you are just waiting and letting the market come to you. The pendulum needs to reach an extreme, which doesn’t happen daily. The beauty of investing is that your broker doesn’t call you and demand that you make investments. You can sit on cash, patiently hunting for a bargain, for months.
I have many times.
Patience is not only the ability to wait in life, but it is also the way we behave while waiting.
Therefore, patience is scarce. Many people can wait, but they become irritated, annoyed, even depressed, or hard to be around. Get above all that, and you’ll possess a rare asset, which most people envy.
Allied World Insurance, for example, was a business that I wanted to own shares of. It’s one of the highest-quality P&C (Property and Casualty) insurers, but the price was too high. I waited. It took close to two years before the market screamed a price that was too good to pass on.
Following a weak quarter, shares sold-off, dropping from $45 to $31, though the earnings weren’t horrible at all, as I saw it. I positioned. At $51 (a 64% return from my $31 purchase), not even a year later, Fairfax Financial, headed by Prem Watsa, known as Canada’s Warren Buffett,bought it out.
In life, patient bargain hunting and patience, in general, will make you more available to others. Value the fact that opportunity comes around, but you can’t be tied up with non-essentials, if you want to seize it.
Patience is a muscle, and the more you exercise it, the more control you’ll have because you’ll be the man, who doesn’t go for the small fish; instead, you’ll be ready to go when a giant marlin is swarming around your boat.