Great elephant hunters like Buffett and Mobius still out searching for bargains
Posted on 04 December 2011 with 2 comments from readers
You have to marvel at the daring of the older investors like Warren Buffett or Mark Mobius still out hunting for elephant acquisitions as the world enters another financial crisis.
The ArabianMoney newsletter (subscribe here) this month examined what these gentleman are up to and guest writer Chris Mayer from Agora Financial highlights the work of Thailand’s Warren Buffett.
Value investors
However, this approach to investing, of which Mr Mayer is also an expert with his best-selling Capital & Crisis newsletter, does not require exact market timing. It is straight from the approach to intelligent investing laid down by the greatest guru of them all Ben Graham.
Reading his tome ‘The Intelligent Investor’ last revised in 1972 he was then warning of the dangers of the Dow Jones at 960 points. The young man planning for his pension then who ignored that would still be up 12-fold today on his retirement. Still other asset classes might have done better and stocks went nowhere in the 70s.
We wonder if that is some sort of lesson for today. All the same, if you had bought gold, silver and oil stocks in the late 70s you won hands down. Perhaps these are some of the big elephants to be considering as investments in 2012.
Timing
Still there is the matter of timing. We seem to be sat on the edge of a crisis and so buying now does not appear to make much sense. Perhaps the bargains will have all been snapped up by the great elephant hunters now and not be available then, though that looks a risk worth taking.
Mark Mobius appeared on the BBC World Business Report arguing that Egyptian stocks are a steal with a 50 per cent fall in 2011. Again ArabianMoney is not so sure that the transitional economy of Egypt will turnaround very fast and our editor said as much on the same program.
Maybe the best course of action for the average investor at the moment is to stake out those elephants and consider a price target. But shooting them now does not add up because they may well get cheaper first in a major downswing in global financial markets.
2 Comments posted by readers:
It’s at times like this when the brave investor goes SELECTIVELY into the market, while the “wall of money” stays on the sidelines. Should the current problems be resolved, or at least postponed for a couple of years, that wall of money will come back into the market – see this week’s rally for an example.
If the proverbial does hit the fan, then no one knows how it will pan out. Cash will probably be good, and gold, but who knows? Diversifying into quality company stocks at relatively cheap prices and paying decent dividends seems a reasonable strategy. Yes they may get cheaper, but you don’t know that for sure.
Buy low, sell high.
Anxiety amongst money managers not to miss any rapid market turnaround. Doesn’t matter if it’s short lived in terms of weeks or months but to miss it would be suicide for the short termers that have to give a quarter-quarter account.