Bear is your Friend
As you know, the main concern of value investors is what kind of business has been bought. In bear market, most people irrationally cheap sell their good business. In other words, it is the best time to cheap buy business for long term benefit.
Bull is your Friend
I must say that, value investors really like to 'collaborate' with all parties. As a friend of Bear market, Bull market is also one of the best friends of value investors.
During Bull market, most of the business are highly valued. When this happens, it would be the best time to expensive sell the business to new owners.
Market is your Friend
In short, value investors are quite busy.
During bear market, value investors are busy to cheap acquire nice business.
During bull market, on the other hand, value investors are also busy to sell their business with attractive price.
During sluggish market, value investors are busy to enjoy their life while waiting for their best friends, Bear and Bull, to visit their market.
Time is your Friend
In the short term, market fluctuation may value a business wrongly. In the long term, the intrinsic value of a business is always reflected.
Let me give you an example. If you own a great business, say dividend of 10 sen annually with Compound Annual Growth Rate of 10%. What is the reasonable price of this kind of business after 5 years? After repeatedly thinking about this kind of question, I believe most of us will make a pretty good decision in stock market investment.
Business perspective
I believe most business people do not simply start their business today, and then close or sell their business within three working days. I also have not seen business owners simply sell their business when market appears to be bad in the future. But I do see business owners sell their business when someone offers a very attractive valuation to their business.
Thus, every decision in stock market investment should be mainly based on business perspective.
"I am a better investor because I am a businessman and a better businessman because I am an investor." - Warren E. Buffett
That's all for today. More fascinating articles and sharing will be updated weekly in Xaivier Blog. So, you are welcome to subscribe our feed to receive our latest sharing.
Written by: Xaivier Chia
P/S: The above sharing is solely based on personal insight and information that believed to be reliable. Your valuable feedback are very welcome.
bsngpg
BULL is not friend of Value Investor:
The generally perceived Bull will seduce value investor to sell a good company as the Bull jumps circuit the normal price growth trajectory by pushing good company to historical height out of sudden which value investor expect it to be only few years later. With that high price, some value investors like the stupid me were tempted to sell and smartly thought to buy back in the next Bear. As Bull is relative and progressive, it somehow lasts longer than expected and the good company justifies its new high price itself along the time through the natural growth. Consequently, the value investor misses the boat to buy back.
Example I bought Zhulian at PE 7x and sold out at PE 10 x which was at its historical high then. The return was very commendable and I thought I were smart. However the share price breaks one height to another height with its PE >10X now. My regret is eating my heart. Thus I conclude, Bull is not my friend as if not because of the evil Bull, Zhulian is still my darling with slow and steady growth.
2013-09-07 12:51