The Mind of a True Investor
January 04, 2009
There are all kinds of Buyers in the stock market. However at KSE there are TWO very prominent types of BUYERS.
One is the traditional Speculator. Satta Master… The other is the Investor.
Mandee specially the kind of Crippling Mandee we saw in 2008 separates the Speculators from the True Investors.
Nothing really seem to make sense when the Mandee is so bad, but let’s discuss this anyway. It is all part of the learning process.
A Speculator is most of the time only interested in the Price movement of the Share… and the looking for Profits from this Price Movement.
A True Investor is more interested in the Quality of the Company and its future growth potential and of course at Profits.
A True Investor go for Value Investing over very long termlike 5 years to even 30 years with review cycles and Profit Takings about every 10 years. This way he is able to switch to better Companies and reinvest his Profits back in the market. This is perhaps the Best way of compounding profits and creating Wealth.
A true investor avoid timing the market when it is falling and if possible invest more once it bounces back. This way he does not feel the stress and is also prepared to expand his portfolio. This is perhaps the reason a true investor enjoys the rewards in the long run.
Mandee at KSE hurts all kind of buyers including Speculators and True Investors. Unfortunately, it is hardest on the Speculators and many are practically compelled to leave the market.
The true Investor is able to survive the Mandee with patience and determination and because he knows that more opportunities will come after the Mandee and greater Rewards will be his once the market improves.
Five of America’s Best Businesses with long history of Success went down along with thousands of other businesses.
These are
BERKSHIRE HATHAWAY BRK-B Down 32%
FEDEX FDX Down 38%
IBM IBM Down 38%
DISNEY DIS Down 37%
MICROSOFT MSFT Down 47%
These above mentioned companies are among the Best and will recover. In fact all are set to recover 33% in the next 40 days. And eventually will fair much better than many weaker companies.
The first company in the above list is BERKSHIRE HATHAWAY with symbol BRK-B and belongs to Warren Buffett perhaps greatest True Value Investor in the history of Stock Business anywhere in the world. Warren Buffett has invested heavily in about 40 Companies in USA. Imagine his loss as almost all the companies that he has invested have gone down double digit in this Mandee except perhaps Walmart that has gained 18% This shows that Speculators are not the only one that suffer in Mandee…. A True Investor like Warren Buffett has lost about 18 Billion US Dollars in this Mandee….
But the amazing thing is he is not in any panic. He feels it is a great opportunity and pumped in about $34 Billion Us Dollars buying shares of several companies knowing that the market will get better again. One can imagine the Profit Potential of Warren Buffett’s Value Investing as he is buying Shares when most others are afraid to even come near the Stock market.
Yes, This Mandee will produce tremendous opportunities. Warren Buffett hs taken advantage of such Mandees before and he will do it again. This is how the Mind of a True Investor works.
I am sure in the long run, this Kali Mandee at KSE will also produce many many opportunities but Caution is very important. Most friends know that KSE is still in the Downtrend and Pakistan is not USA but the fact remains that sooner or later Bounce back will come and we must get ourselves prepared and willing to take calculated risks for selective Value Investing.
Good Luck and Great Hunting.
Taufiq
