(a) Patient opportunism—waiting for bargains—is often your best strategy.
(b) You’ll do better if you wait for investments to come to you rather than go chasing after them. Select from the list of things sellers are motivated to sell rather than start with a fixed notion as to what you want to own.
Try to sit on your hands. Don't go out with a “buy list”; rather, wait for the phone to ring.
(c) To be successful in investing, we must recognize the condition of the market and decide on our actions accordingly.
Cycles will rise and fall, things will come and go, and our environment will change in ways beyond our control. Thus we must recognize, accept, cope and respond. That is the essence of investing.
(d) Investors needn’t feel pressured to act. They can pass up lots of opportunities until they see one that’s terrific.
There’s no penalty for omitting good investments, the only real penalty is for making losing investments.
Having said so, calibration is important. Set the bar too high and you might remain out of the market for a very long time. Set it too low and you will be fully invested almost immediately; it will be as though you had no standards at all. Experience and versatile thinking are the keys to such calibration.
(e) We may look through fifty or seventy investments to find a handful of good ones. If we buy six that work out and miss fifteen that we should have bought, we never view this as a loss.
(f) Warren Buffett said there is no need to swing for every pitch. The bat should come off our shoulders when there are opportunities for profit with controlled risk.
One way to be selective in this regard is by making every effort to ascertain whether we’re in a low-return environment or a high-return environment.
A low return encironment is when price is high. The opposite is true for a high return environment. It is not advisable to pursue high return in a low return environment. Because it can only be achieved through increased risk.
(g) The market’s not a very accommodating machine; it won’t provide high returns just because you need them.
You simply cannot create investment opportunities when they’re not there. The dumbest thing you can do is to insist on perpetuating high returns—and give back your profits in the process. If it’s not there, hoping won’t make it so.
(h) Having said so, you can take a long term view. During low return environment, you can invest anyway—ignoring short-run risk and focusing on the long run. This isn’t irrational, especially if you accept the notion that market timing and tactical asset allocation are difficult.
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