Message Font: Serif | Sans-Serif
 
No. of Recommendations: 1
Hey Dan,

the good solid companies based upon hours of your research will still be solid companies and would be companies that will return significant earnings.

I don't think that this is a matter of "faith," as you call it, but the way it is. Now, I don't know how correct your assessment (or mine or any of the Fool's portfolio's) may be, but the good companies will produce significant cash flow and as a result they will appreciate -- at some level appropriate for the discounted present value of those future cash flows.

"don't worry about the short-term, because the long-term will reward you."

Again, depends on how well you pick. That's an important caveat. Pick well, however, and it will. We're still in the "short-term" of this bear market. Let's let it play out another ten years before drawing any conclusions. :)

Because they were Wise, they freaked out when they heard about the less than stellar earnings of the giants. They Wisely sold out their positions when they heard about the Microsoft ruling. On and on, they reacted to news, worrying about their short-term positions, and selling out.

Ah, the less-than-stellar-earnings line. This is one of those things that reporters pull out whenever the market falls that day: "Concerns about the Fed's upcoming meeting and less-than-stellar earnings reports drove the market down today as traders...etc. etc." Then the next day, "Enthusiasm over better-than-expected earnings sent stocks soaring today...yakyakyak."

Some earnings reports are bad, some are good. If folks traded on the Microsoft ruling, then they must not have been paying attention to the trial (or they were just wildly optimistic), since it was perfectly clear how that was going to turn out. I don't recall any really big gaffes recently, but even if there were some, it wouldn't matter unless you owned that company. Is Berkshire down because Cisco's earnings were worse than expected? Maybe, but if so, it's a display of irrationality.

Wise as they are, they are outnumbering us.

They certainly have a lot more cash than we, and I dare say that they always will. For that reason, they can push and pull the market -- for a while. Short-term. Maybe a month, maybe even a year. But in the end, it will be a company's ability to produce cash flow that will matter.

This is precisely why the Fool exists, in my view. We're not trying to be the louder voice that can move the market up. We're trying to help people to keep their eyes on the ball -- future discounted cash flows -- rather than the noise.

We try to point out that it is not "right" to buy and sell your holdings based on the ebb and flow of the Market the way that many (not all, but many) of the Wise do, not to trade on hype and emotion.

In that respect, periods like these show exactly that the Wise are NOT "so damn right." They moved the market up way high in March, now they've dropped it down. That's a very inefficient use of time and money. I myself, and the RB port, haven't contributed to either. We're just sitting by and watching the river flow, looking for any news or development that may actually matter. Waiting, as Buffett would say, for that perfect pitch.

That's not only a more productive use of time, it's also much more relaxing. :)

Fool on!
BrianZ

Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.