Some days ago I tweeted about the swings of Mr. Market lately. The consideration of the stock market as Mr. Market is a metaphor that we owe it to Benjamin Graham.
Since a picture is worth a thousand words, I wanted to share a snapshot of the swings of our “J&L” ( 😉 ) portfolio in the past few weeks. One could read the picture as “you have lost 114$ in the past weeks”. That same person on January 28th would have said “you’ve lost 2,000$ in the last 10 days”.
"Resist the human bias to act", Charlie T. Munger
In fact we have not lost a nickel in these weeks, since we haven’t sold any stock. I love a quote from Charlie T. Munger, Berkshire Hathaway vice chairman, which goes: “Resist the natural human bias to act”.
You actually don’t need to buy or sell stock when the market is in the mood. It is as easy as not doing it. You may buy only when you see a margin of safety and sell only when the stock has reached what you considered it to be at its intrinsic value.
You can see that in these 5 weeks we could have lost up to 2,000$ twice; we didn’t. The only tools we counted with: patience and not “listening to Mr. Market”.
Precisely today, it is published the letter of Warren Buffett to Berkshire shareholders. Whether you are planning to invest in stocks or only want to have a fun read, take a look at it.
Close to midnight of past Thursday we learnt that the winner of the KC-X competition to provide the aerial refuelling aircraft to the US Air Force was Boeing. That was cold news for our company.
I had just tweeted the previous day my bet on the competition:
I never get it right...
To reach to that conclusion I had done some numbers for fun on a late Friday afternoon some months ago in a similar fashion than the defence analyst Scott Hamilton showed in his blog. It is clear that I got it completely wrong.
As I have often told to my friends and colleagues, I am extremely bad with these predictions, as I was already mistaken when the JCA and the previous KC-X competitions were decided…
A note of humour: as my brother points out in fact I am very reliable, you just have to bet to the opposite option of my forecast.
Another colleague told us yesterday “you look like economists explaining your miscalculations…”, as someone put it “it is already hard to explain the past, it is even more difficult to predict the future”.
Already looking forward to the next win.