NEWSLETTER
Image Source: The Motley Fool
It has been a strange and disconcerting week in the stock market. While some investors may be experiencing such turbulence for the first time, one that is not a billionaire Warren Buffet.
Buffett has experienced multiple changes of dramatic stock market for decades, and used them for its advantage.
As the stock market has turned this week, I have taken into account some of Buffett's advice on such moments, a particular piece.
Imagine the market calling your door every day
Buffett had the idea of his teacher Ben Graham and I think it's simple, but powerful.
He talked about a person named Mr. Market. Today we could also say more market, but here I will only refer to him/her as 'The Market'.
Every day (or at least every day the stock exchange is open), it offers to buy shares at a certain price, or sell the same share at a similar price.
As an investor, you can buy, sell or not do anything. Year after year, decade after decade, you have the same option.
Here is why this idea is so powerful
That may sound like a fairly obvious vision. In fact, I don't believe it.
Consider the real estate market, for example. In a difficult market, you can list a property for months or years without finding a buyer.
In the art market, you may want to buy a painting. But there is only one and, no matter what it offers, its owner is not willing to sell.
On the contrary, the stock market allows you to buy, sell or simply sit the storm, as you choose.
So, just because the shares fall in price does not mean that an investor needs to do anything when the market offers a price to sell or buy.
On the other hand, if they think that the investment case does not change, they can simply sit, ignore market noise and have a long -term vision. It is no coincidence that Warren Buffett has described his ideal retention time as “forever“
Hunt bargas, when you look good
Likewise, an investor can buy bargains when the market offers an action at a much lower price than before.
This week, I did exactly that and I took the opportunity of a strong drop in the price to add my participation in Filecro (LSE: FTC).
During the past year, the price of the action was far doubled. In a five -year timeline, more than 1,000%has grown. That is the type of performance that even Warren Buffett struggles to achieve!
It reflects the company's growth and profits due to a series of agreements for your specialized communication team, especially Spacex. Last year, income increased by 56%, while a net loss of the previous year gave way to an £ 3.1 million gain.
With the potential of New Orders of Spacex, which has invested in Filtronic, I think the commercial perspective is pink. But the price of the action had increased abruptly to reflect that.
Then, when the market suddenly offered a much cheaper filtronic shares price this week, I bit my hand.
The great dependence of a single client is a clear risk and could mean the drop in income if Spacex stops ordering. So I want to buy at a price, I think it reflects such risks. Briefly, I had the opportunity!
(Tagstotranslate) category. Investing
