Sunday, May 30, 2010

Patience Will Pay off

I am getting a wee bit excited again because of the global market turmoil and downwards stockmarket prices - it is dull and dangerous when share prices rocket beyond their real intrinsic value - because good stocks are starting to look attractive again.

I started buying stocks in the Share Investor Portfolio again when they approached my ball park for buying back in April 2009 and didn't stop until shelling out $35,000.00 for Mainfreight Ltd [MFT.NZ] and The Warehouse Group Ltd [WHS.NZ] in July of that year. I got what I thought were comparative bargains and was happy with my purchase then and still am now.

The thing is, and this was inevitable given the fragile nature of the worlds economy, markets have stepped back into the fear cycle due to the bleak outlook and have started moving in a southwards trajectory.

Bad if you bought at the peak of the buying frenzy over the last year but good if you are the patient little tortoise just peeking out from under your shell again.

It is clear to me though that this is just the beginning of a market slide and better opportunities await for those will to marketwatch and twiddle their thumbs for a while.

Over the last year or so we have seen markets like the DOW recover from their lows to be up by more than 60% at its peak earlier this year, a rise bigger than the one after the great Wall Street crash of 1929. We have to expect, given that, that our markets are going to correct themselves from these peaks and find a level more suited to the uncertainty and bleak outlook for the global economy and as markets always overreact to bad and good news we will probably see some relative bargains to be had.

The DOW trading at levels close to its pre Sept 2008 slide high, is not an index that mirrors what is happening now, let alone what could happen in the future with all this State debt sloshing around.

The New Zealand Stockmarket has lost around 10% off its mid April 2010 peak to finish at 3047 on the Top 50 Gross Index last Friday and as night follows day it always follows the fortunes and misfortunes of its much bigger brother across the Pacific and then a few thousand miles more.

Be ready then to buy as the market falls. Buy good quality and the best buys are often stocks you are already holding in your portfolio that have perhaps dropped below your initial buy price. Hell you bought at that price, if they are on sale and the long term company prospects are good why not stock up?

The key is patience though. I think markets are going to fall a significant way from current levels and some stocks are going to come off worse than the average. It is very hard to pick market lows (I would say impossible) so buy at levels you are comfortable with but don't buy yet - unless you know something I don't.

A slow race to the finish line will make you a winner.


What Share Investor Has Been Buying

July 2009
July 2009
July 2009
April 2009
July 2008
June 2008
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Every Bastard Says No
From Fishpond.co.nz - Every Bastard Says No: The 42 Below Story


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