The wisdom of great investors #1

The wisdom of great investors #1

“A market downturn doesn’t bother us. It is an
opportunity to increase our ownership of
great companies with great management at
good prices.”

 

Warren Buffett
Chairman, Berkshire Hathaway

 

 

In this first of a series looking at the wisdom of great investors, we focus on market corrections and how they can be an opportunity for the patient, long-term investor.

Market corrections are an inevitable and frustrating part of any long-term investment journey. How you react to them can greatly affect your investment results.

This is illustrated below using the results achieved by three hypothetical investors who each invested US$10,000 at the market’s highest point prior to the 2008 market downturn:

Investor types

 

Market correction

If you are a long-term investor, when faced with a market correction do not react emotionally or abandon your investment plan. Be patient and, assuming your goals and/or time horizon have not changed, view the downturn as an opportunity to purchase good businesses at attractive prices.

 

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Important information
This material provides general information only and has been prepared without taking account the objectives, financial situation or needs of individuals and should not be used as the basis for making investment, financial or other decisions. This material was issued by Pan-Tribal Asset Management Pty Ltd (Pan-Tribal) ABN 35 600 756 241 AFSL 462065.

Pan-Tribal does not give any warranty, guarantee or representation about the accuracy or reliability of the information contained in this document and disclaims any and all warranties, express or implied in relation to the accuracy or reliability of the information. Past performance information provided is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance. Investing involves risk including loss of capital invested.

The S&P 500® Index is an unmanaged index of 500 selected common stocks, most of which are listed on the New York Stock Exchange. The Index is adjusted for dividends, weighted towards stocks with large market capitalisations and represents approximately two-thirds of the total market value of all domestic common stocks. Investments cannot be made directly in an index.

Warren Buffett is not associated in any way with Pan-Tribal Asset Management, Davis Advisors or their affiliates.