June 2, 2012- The Right Perspectives

Some nuggets of wisdom I found while reading an article from Valuewalk investing, maybe sharing it can help you too:

Value Walk – The Best Advice is To Ignore Forecasts

“As a personal financial advisor it is a challenge to get clients to “do nothing.”  The first year or two working with a new client I need to remind them that they should be tilted toward savings, inaction, patience, and analysis.  Thus keeping trading costs down.  And eventually buying on the cheap, usually when others are completely freaking out due to M.I.F. (media-induced frenzy).”

Based on real numbers, I believe that the S&P 500 appears reasonably priced today.  However, as I’ve often written before, I really don’t believe in predicting markets.  Instead, I believe in building portfolios one company at a time because I believe it is easier and more accurate to analyze one company and the near-term prospects of its business, than it is to try to analyze a large universe like the S&P 500. What many investors fail to realize is that even during the great recession of 2008 many companies continued to prosper and grow. McDonald’s Corporation (NYSE:MCD) is just one name that immediately comes to mind.

McDonald’s produced exceptional returns on their shareholder’s behalf since 2006.  This had nothing to do with macroeconomic events, and everything to do with the individual performance of this exceptional company

In closing, the only reason I write articles like this one is as an attempt to try and counteract the numerous other articles that are forecasting the next great market collapse. The naked truth is that neither I, nor anyone else really knows what the market might or might not do in the near term.  On the other hand, I believe that the evidence supporting a long-term bright future is compelling.  Even if we do experience a downdraft, whether it’s self-induced or not, as it always has before, I believe it will be temporary and represent a great buying opportunity.

*****

Great Quote: The job is to ask questions – it always was – and to ask them as inexorably as I can. And to face the absence of precise answers with a certain humility. – Arthur Miller

My good friend once told me this nice Japanese proverb.  1kagemusha?  To know that you do not know is the best wisdom that one can have.  Tabula Rasa 🙂

 

The greatest people I’ve met in the industry are very humble people.  Practice a lot of humility.  In which case, the markets will always humble you,

-Faceless Trader

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One Response to June 2, 2012- The Right Perspectives

  1. note worthy to also check the chart of $MCD. Even good companies can fall… from 100 to 85, 52 week low is at 80. No shares in mcdonalds 🙂

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