“I feel like an oversexed man in a harem. This is the time to start investing!” (Warren Buffett)
That’s so typical of Warren: a man who actually gets excited when share markets tumble. And you know what? I can relate to him and so did my Dad’s share clients in days past!
The ones who “gambled” and realised they “should have listened” to him panicked – they rushed to sell and lost heaps. Others, groaning with palms on their foreheads, did what Dad told them to do – they went to Changi Beach for a swim and had chilli crabs for lunch!
Of course, it’s awful seeing your shares plummet to much less than what you paid for them. It hurts your pride, it lowers your confidence and leaves you feeling sorry for yourself. In 40 years of investing, I’ve experienced the same despair at least a dozen times.
Stocks which are fundamentally strong, have dedicated teams running healthy businesses, and pay regular dividends will always bounce back. Some will even exceed their previous highs.
In the meantime, remember that the market doesn’t care about fundamentals in a crash or correction: it actually flattens every sector until it’s had enough … and Buffett and other investors with spare cash will stand ready to buy when that happens.
I wish I could tell you when it’s time to buy. There are days when recovery looks certain to continue – but just when you think “Now!”, it flops again. It’s what we call “a dead cat bounce” – but will it happen 9 times before the worst is over? I don’t know.
However, I am an old hand. The sharemarket has always captivated and fascinated me. I know by now that not even the best financial commentators can pick the right times to buy and sell.
So what do I do? I rely on my instincts and they are right (most of the time). All that’s missing from my share-gazing crystal ball is hindsight.
Basically, it’s only a game of assessing the odds – just like picking the right horse:
- STUDY. Know the horse’s history and its lineage.
- SELECT. Don’t wager more than you can afford to lose.
That’s how to do it!
February Share Updates
- Australian Agricultural Company (AAC): No further announcements since their half-yearly report was released on 26/11. But cattle futures have been going up.
- Cleanaway (CWY): Hit a high of $3.17 on 4/1, recovering quickly from the correction last week. I think companies involved in battery recycling – or, in the case of CWY, household and commercial waste removal – are well worth looking into. Hold or accumulate!
- Humm Group (HUM): Entered into a non-binding agreement with Latitude for the sale of its consumer business on 6/1– board still undertaking due diligence. Private equity firm Cerberus Capital tipped to acquire the rest of its business – see article in The Australian on 25/1. One of only 2 domestic BNPL companies currently making a profit.
- Poseidon Nickel (POS): Significant NiCu (nickel-copper) intersection assessed as very high grade. Read announcements made on 21/12/21 & 27/1/22. Production stage being planned with feasibility study in progress – final investment decision expected in July 2022.
- Volpara Health Technologies (VHT): Tech stocks like Volpara were not spared in last week’s correction. I’m not concerned – Volpara’s Breast Health platform is the most clinically validated in the industry, and the trend towards more personalised breast health care is gaining momentum – see the investor newsletter released on 22/12/21. Q3 results come out on 31/1/22.
- I’ve been keeping an eye on Adairs (ADH) and Accent (AX1) since Motley Fool recommended them in one of their previous newsletters. Both didn’t perform well in the last quarter, with lockdowns, supply chain disruptions and labour shortages mostly to blame. Online sales were still robust, but foot traffic was down. Both are trading well off their highs, but I’m ignoring that – think long-term. ADH in particular looks too tempting to ignore at current prices – I hope to add it to my portfolio next month!
- Meanwhile, in the resources space, metals, minerals and rare earths – among them lithium, nickel and tin – are HOT!
- Lithium is a vital mineral in rechargeable batteries (including the one in your smartphone) – that’s why it’s called ‘white gold’. High demand has seen lithium prices soar in recent times, but there is a catch: lithium mining is far from being environmentally friendly. Sam will discuss this in a future instalment of Sam’s Corner.
On a happy note, I’d like to share part of what I read in Motley Fool’s 27 January post, ‘Dealing with Market Stress’ (I subscribe to their ‘Share Advisor’ and ‘Extreme Opportunities’ newsletters):
“Bear markets are tough. Emotionally and financially. Remember, though, you are not alone in feeling the pain, and there are strategies that can be put in place to mitigate that pain … bear markets do end. And I believe that those who stay the course will be rewarded in the long run.”