Trade The Journey

Trade The Journey

“Never seen anything like It”

This statement echoed throughout the market and from the most active participants.

Last week made headlines as one of the worst-performing weeks in history. Fears of the coronavirus spreading to American Soil, as well as the spread to other countries, spooked the markets. When the market gets spooked, prices fall as participants head for a safe exit.

 

Currently, I’m listening to the Master Cycles by Howard Marks. It couldn’t be better timing.

At first, I thought the book to be of little value since the book was mass published and available to the masses. Usually, the best sellers on the bookshelf are watered down. Howard Marks is a well-known investor with over 48 years of experience in the market. I don’t know what caused the skepticism, but it existed.

Maybe it is the simplicity in which Howard Marks speaks. It isn’t the complexity I’m used too when watching Bloomberg. Warren Buffett is the same way; they speak with familiarity and comfortability when describing the behavior of the market.

Peeling back the layers of investing brings you back to the center. The Market’s direction is ultimately based on the psychology of each person and the relation to the masses. In short, that is what cycles are all about and what the market is currently facing. “Mastering Cycles” is about understanding that each facet of the market has a cycle and that one cycle causes another.

For many of us, this is the first time we’ve seen a severe market downturn. The downturn happened so fast that the major players didn’t have time to react, and the small players were eager to get out. And here is where the most straightforward part of investing comes into play.

 

It would be best if you dared to buy when others are fearful and sell when everyone is the eternal optimist.

“It’s all about the price you pay” – Howard Marks.

Learning about “price” is a subject within itself. Price is information, and sometimes the price equals the info. However, sometimes price does not equal information, and here is where the true investor earns their income.

I’ve never seen anything like the drop that occurred last week. Each day the dow dropped over 500 points. The dow represents the most stable companies, also known as blue-chip companies. Corona Virus fears overtook the market, and these companies saw their earnings shrink further.

The reports, the President, and the development of this market continue to hinder the market’s recovery. Each factor above creating an additional weighting factor continuing to pull the market down.

 

So what am I to do?

Enjoy the sale. Most companies are selling at a discount. It might help to think of a sale at your favorite store. The product you like is of the same quality and effectiveness as before yet it’s selling for less than its value.

Numerous motives might cause a sale to take place. A lot of the companies I valued before are selling at a discount. An ideal opportunity to buy.

 

Here are some questions I’ve been asking myself:

When is the best time to buy?

How much farther will the prices sink before they rebound?

 

Only an estimate can be made regarding the length of the market’s downturn and how quickly it recovers. So no one knows.

The best method of action is to buy companies you’ve already researched and identified as winners. It may take a while, but things will return to normalcy.

 

These are the bargains I’ve been looking for.

Corrections? Considerations?

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