Right time to know where the treasure is hidden in stock market.
We wait for the years to buy best quality stock at attractive valuation and the company which have competitive advantage, strong moat and have margin of safety.
In the bull market it is not so easy to find the under value stock but when there is a collapse in the financial market, we are easily able to search for the hidden treasure, the quality stock, which meet our standard as per value investing.
First question the investor asked is that “Is it the right time to invest”? Or should we wait for more correction? The best we can do is to analyse the quality of the company and if we found that we have enough margin of safety, we should start investing.
Correction in the financial market is the indication to make enormous wealth, with no risk and to achieve good return. Currently the quality stocks are available at discounted price are Apple Inc @ $245, Bank of America @ $ 21 ,, Visa Inc @ $165 , Johnson & Johnson @ $137 & Nike Inc @ $84.
These are the best stock to buy and hold for a long time to create wealth. There is no right time to buy all we required is a margin of safety and sell at a high price at the right time. To buy at this current level, it is very safe, as we are facing such impact of coronavirus and due to this financial market is not performing.
Currently is a right time to construct the quality portfolio. The coronavirus can be worst as it look like and that will affect the financial system, in this case we should not be waiting for the right time, if we get the right valuation, we can buy at this level , as this virus gets controlled , then the market might need a year to get back on track and a good quality company can again be able to generate enough revenue and free cash flow .
Already we have seen the reaction of stock market due to coronavirus ,all the sectors have reacted differently , the majority of degrowth is seen in automobiles , & Aviation , Hospitality , Oil & Gas.
All sectors are not affected equally; the current market is processing different information and reacting differently.
Amazon Inc has gain 4% compare to S&P 500 YTD Return -19.41%.
Best time to buy is when others are selling .Understanding the current market crisis; it is the right time to build a robust portfolio.
What we currently look in a company is the strong fundamental value. We should now focus on enough Margin of Safety rather then forecasting the earning or predicting where the market will be tomorrow .Due to low price, we can get margin of safety, a very good return in future and if the further price goes down, we should keep on buying.
It is the time to hunt for treasure at bargain price. We should not leave any stone unturned in creating quality Portfolio.
Money, Monkey & We
The quotes are applicable with all of us also, I have seen lots of people dream to buy car like BMW or Rolex so another expensive house, etc and they focus on this materialistic stuff and don’t focus on making money if they can focus on making tons of money, then they can buy more car and more houses not only one , but people fail to do that , they are trained by the society to think in this way .
Those who can see the vision to earn money, can make money and buying the stuff is secondary matters to them, like Warren Buffett, don’t dream to buy house or expensive car, when he was young, he used to dream to make money, most of the people act as a money and need a banana and forget that if he can make money. What are you thinking? Make money or buy one car?
I have seen most people never able to make money all they can do is to buy a BMW car in EMI and whole life feels proud that they have achieved their dream, if warren Buffett or bill gates have thought the same as buying an expensive car, they would not a billionaire.
Mahabharata has given us enough lessons about life which are applicable in today’s time as well.
Dronacharya’s bird-eye test
Once, Dronacharya overheard Duryodhana accusing him of favoring Arjuna and ignoring the rest. To prove him wrong, Dronacharya placed a wooden bird on a branch and decided to put everyone through a simple test.
He gathered all his subjects and asked them to strike the eye of the wooden bird. But before letting them set their arrows loose, he asked each one of them a question.
He first called and asked Yudhisthir, the eldest of the lot: ” What do you see there?” To which Yudhishthir replied, “I see a wooden bird, the branch and the tree, the leaves moving and other birds.”
Everyone else who followed also mentioned the same elements: tree, branch, bird, leaves, etc. and Dronacharya asked them all to lay down their bow & arrow. When it was Arjuna’s turn, he confidently stated:
“I can only see the eye of the bird.”
Dronacharya smiled for he had been proven right. Everyone else had set their eyes on everything but Arjuna had set his eyes on his goal, the eye of the bird.
Arjuna’s reply is reflective of his abilities to streamline all his focus towards the goal. Concentration is what we learn from here.
This gives us interesting learning about life:
While others failed to separate their goal from the distractions in their path, Arjuna was able to ignore everything else and have his eyes only on the prize. In life, there are so many irrelevant things that consume our energy on a day-to-day basis. We should always put the chaos aside and concentrate on things that matter.
“Money is not important – Make this statement once you earn enough money to spend your life smoothly”.
“You will never be able to hit a target that you cannot see.”
I have asked many people, what you want from life. Same answer
- BMW car
- Good Nice House
- Apple Phone & Watch
- And same, no one ever say I want to make tons of money and I can only see this .Those who say are the Billionaires.
“Selling your winners and holding your losers is like cutting the flowers and watering the weeds.” Peter Lynch
DOW JONES INDUSTRIAL AVERAGE December 31, 1964 874.12 December 31, 1981 875.00 He walked over to the screen and started explaining. “During these seventeen years, the size of the economy grew fivefold. The sales of the Fortune five hundred companies grew more than fivefold. Yet, during these seventeen years, the stock market went exactly nowhere.” He backed up a step or two. “What you’re doing when you invest is deferring consumption and laying money out now to get more money back at a later time. And there are really only two questions. One is how much you’re going to get back, and the other is when. “Now, Aesop was not much of finance major, because he said something like, ‘A bird in the hand is worth two in the bush.’ But he doesn’t say when.” Interest rates—the cost of borrowing—Buffett explained.
“This is half of a page which comes from a list seventy pages long of all the auto companies in the United States.” He waved the complete list in the air. “There were two thousand auto companies: the most important invention, probably, of the first half of the twentieth century. It had an enormous impact on people’s lives. If you had seen at the time of the first cars how this country would develop in connection with autos, you would have said, ‘This is the place I must be.’ But of the two thousand companies, as of a few years ago, only three car companies survived. And, at one time or another, all three were selling for less than book value, which is the amount of money that had been put into the companies and left there. So autos had an enormous impact on America, but in the opposite direction on investors.” He put down the list to shove his hand in his pocket. “Now, sometimes it’s much easier to figure out the losers. There was, I think, one obvious decision back then. And of course, the thing you should have been doing was shorting horses.
U.S. HORSE POPULATION 1900—17 million 1998—5 million “Frankly, I’m kind of disappointed that the Buffett family was not shorting horses throughout this entire period. There are always losers.”
“Now the other great invention of the first half of the century was the airplane. In this period from 1919 to 1939, there were about two hundred companies. Imagine if you could have seen the future of the airline industry back there at Kitty Hawk. You would have seen a world undreamed of. But assume you had the insight, and you saw all of these people wishing to fly and to visit their relatives or run away from their relatives or whatever you do in an airplane, and you decided this was the place to be. “As of a couple of years ago, there had been zero money made from the aggregate of all stock investments in the airline industry in history.