Can a smart investor survive the crises?
Team Veye | 23 Mar 2020
Old adage “Sell when everybody is greedy and buy when they are fearful” has time and again proved to be true. Stock markets have invariably made up the losses in the months subsequent to crash.
It has been seen that when the market turns up, sellers are afraid to buy again. As a result, they lock in their losses. If you have sold during the crash, the human mentality says that you will not buy in time to make up your losses.
If the investors don’t panic and act smartly there is a very good chance that they not only recoup the losses when the market rebounds but also make money. Markets are galore with stories of such people who turned such market falls to their advantage.
Warren Buffet is known to have bought great companies at bargain prices. Many good companies are available at bargain prices during such times. Berkshire Hathaway’s fundamental strategy has been to identify valuable companies and then acquire increasingly large portions of them. Its portfolio is also full of more obscure successes too Like See’s Candy, which Buffett calls his “dream business. Buffett bought See’s Candy for $25M in 1972, and by 2019, it had brought in “well over” $2B — a nearly 8,000x return. His wisdom is fully reflected in his quote “Price is what you pay, value is what you get”.
Although nobody has a crystal ball to suggest the most opportune time, it is the time to identify such companies which have growth potential. Although the picture looks gloomy at such times, with negativity around, it is just the right time to hold your nerves. There could be many stocks and sectors where panic selling has happened irrespective of valuations.
Smart investors never buy a stock just because it is cheap. They ignore the short-term movements but not the value of intangible assets. The recent crash is rare in the sense that almost every class of assets has fallen like shares, property, and commodities including oil. Maybe, it could turn out to be a once in a lifetime opportunity too.
Veye Pty Ltd(ABN 58 623 120 865), holds (AFSL No. 523157 ). All information provided by Veye Pty Ltd through its website, reports, and newsletters is general financial product advice only and should not be considered a personal recommendation to buy or sell any asset or security. Before acting on the advice, you should consider whether it’s appropriate to you, in light of your objectives, financial situation, or needs. You should look at the Product Disclosure Statement or other offer document associated with the security or product before making a decision on acquiring the security or product. You can refer to our Terms & Conditions and Financial Services Guide for more information. Any recommendation contained herein may not be suitable for all investors as it does not take into account your personal financial needs or investment objectives. Although Veye takes the utmost care to ensure accuracy of the content and that the information is gathered and processed from reliable resources, we strongly recommend that you seek professional advice from your financial advisor or stockbroker before making any investment decision based on any of our recommendations. All the information we share represents our views on the date of publishing as stocks are subject to real time changes and therefore may change without notice. Please remember that investments can go up and down and past performance is not necessarily indicative of future returns. We request our readers not to interpret our reports as direct recommendations. To the extent permitted by law, Veye Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss, or data corruption) (as mentioned on the website www.veye.com.au), and confirms that the employees and/or associates of Veye Pty Ltd do not hold positions in any of the financial products covered on the website on the date of publishing reports. Veye Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services.