EMOTIONAL CONTROL
Our clients want to profit from buying shares in great companies when markets decline.
Warren Buffett, and all great investors understand that the time to invest in your favourite companies is when the markets have crashed. These opportunities don’t come along very often. This is the definition of “being greedy when others are fearful” as Buffett is often quoted saying. The other way to express this opportunity is to “buy low”.
All great investors understand the value of emotional control.
Investors with no knowledge of (or concern for) profits, dividends, valuation or the conduct of business simply cannot possess the resolve needed to do the right thing at the right time.
HOWARD MARKS
Howard Marks is telling us that if you understand the attributes of a quality business like its ability to generate cash and continue to pay dividends, a sharp decline in share prices should be seen as a great opportunity to buy more. It is common behaviour for market speculators to be selling at the exact time they should be buying. This is because they lack the understanding and emotional resolve to buy when prices decline.
During a discussion between Howard Marks and Joel Greenblatt, the two investment legends had the following to say:
“Most people, including most people in the investment business, don’t have the ability to take advantage of market opportunities. We get excited when prices are high and we get depressed when prices are low” said Marks, before Greenblatt interjected, “I think you and I would agree that people are nuts.”
Additional Reading
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Winners in the World of Sport
Key Points. Nike is the largest seller of athletic footwear and apparel in the world, with the NIKE and Swoosh trademarks registered across 190 jurisdictions. The Jordan Brand is cultural asset that transcends sport. No competitor occupies the same structural position. Nike is an example of a global franchise correcting past mistakes and providing an…
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Concentration, Capital, and the Lesson of 2000
Key Points. The S&P 500, consisting of the 500 largest US companies, has become so concentrated that forty percent of its value sits, at the time of writing, in just ten companies. Those ten companies spend hundreds of billions on data centres to power AI services. They funded the build-out with cash they generate, then…
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Why Your Currency Strengthened
Key Points. Open a South African newspaper in mid-2025 and you would have read that the rand was strengthening because of political stability, improving energy supply, and growing international confidence in the country’s direction. Open a Swiss financial publication and you would have found reassuring commentary about the franc’s safe haven status attracting cautious capital…
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The Reason Behind the rising Gold Price
Key Points. This article examines how asset prices move because buyers exceed sellers, and then accelerate as momentum traders join the buying. Price appreciation does not change what an asset produces — or whether it produces anything at all — for its owner. China’s Gold Accumulation Since 2020, China’s central bank has added 557 tonnes…