The Intelligent Value Investor’s ‘Desiderata’
GO placidly amid the market noise, rumors and the haste, and remember what peace and riches are there may be in less market activity and silence.
As far as possible without surrender, be on good terms with all market participants. Speak your truth quietly and clearly, and do not spread false rumors about stock prices nor immediately buy and sell based on rumors. As Warren Buffett, one of the wisest stock market investors, used to say, “With enough inside information and a million dollars, you can go broke in a year.” Always remember a fundamental law in stock market investing, “Returns decrease as motion [actively managed trading] increases.”
Listen most especially to the value investors and fundamental analyst. However, learn lessons from the pure technical analyst —even the seemingly dull and the ignorant— for they too have their story, and you can certainly avoid their mistakes. Avoid loud and aggressive traders, especially those who use only pure technical analysis and who disregard the fundamentals, for they are vexations to your portfolio.
If you constantly compare your portfolio with others, you may become vain or bitter; for always there will be those who have greater gains in their portfolio than yourself. Enjoy the gains that you have, and stick to your game plan. Keep close monitor of the stocks of the companies with durable competitive advantage that you are holding, for they produce real wealth in the changing fortunes of time.
Exercise caution in your investing, for the world of stock market investing is full of trickery. Avoid over-leveraging your portfolio. But let not this blind you to the potentials of making money in stocks. The stock market is the greatest money-making machine invented by man and, if done properly, will most certainly let you achieve great returns.
Be yourself. You may learn all you can from books, seminars, and from mentors and gurus but, in the end, it is you who will do the actual buying and selling. Take kindly the counsel of the years, for as you learn more about stock market investing, especially if you read and learn about investing from a business perspective, you become a much wiser investor.
Nurture strength of spirit to shield you during volatile market downturns, especially during a bear market. For as long as you are investing from a business perspective, you can be assured that you are making the right decisions. Do not distress yourself with what the market participants are doing. Many who get burned in the market are those who follow blindly what others are doing. While knowledge of stock market investing is crucial to investing success, of equal or even utmost importance is the emotional stability amid market noise.
You are an intelligent value investor, and if you have done your homework well, your buy and sell decisions are correct, no less than the decisions made by the famous value and intelligent investors of the past and present. And whether or not it is clear to you, there is no doubt that you have made the right decision.
Therefore, be at peace with how your portfolio is doing no matter how seemingly small your gains are in the present because, in the long run, as Benjamin Graham, the father of value investing, says, “the stock market behaves like a voting machine, but in the long term it acts like a weighing machine.” True value will, in the long run, be reflected in its stock price. And whatever your labors and aspirations in the noisy confusion of the stock market, keep peace in your soul. With all its sham, drudgery and broken dreams; it is still a beautiful place to grow your money. Be cheerful.
Strive to be happy and contented with your portfolio. Above all, strive to always be an intelligent value investor and take comfort in the mantra, “Investing is most intelligent when it is most business-like.”
(Adapted from Max Ehrmann’s “Desiderata” written in 1927 and revised for the intelligent value investor in the stock market investing by Zigfred Diaz).
Atty. Zigfred Diaz is a Registered Financial Planner of RFP Philippines. He is a director at Certa Inc., a personal-finance advisory firm. To learn more about personal financial planning, attend the 70th RFP program this July 2018. To inquire, e-mail firstname.lastname@example.org or text <name><e-mail> <RFP> at 0917-9689774.
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