Warren Buffett once said that the market does nothing 90 percent of the time, and the problem with that is that you and I will never know when the other 10 percent will occur. That’s why you want to own first-class stocks with dominator profiles that have good moats around their business, and hold onto them tightly.
Think about all those wonderful new gadgets we have in the stock market game these days. In the last 10 years we have seen earth-shaking changes. On the Net you can get real-time quotes, for free. You can get access to Level 11 quotes, just like the “pros.” You can buy software that will give you systems that are (supposed) to give us the inside track on big trading profits.
Guess what? With all this new stuff no one can consistently call the market turns. So, in fact, nothing has changed, even with all the neat new technological advances.
That’s a fact.
I would hate to tell you how much time I have personally wasted during my 24 years in the markets — looking for that perfect guru, the one person or computer system that can help me make “fast money” (as Beldar Conehead says).
I can confidently tell you that there is no such thing.
But that will not stop the hustlers and tipsters from trying to convince you they have “magic in a bottle.”
How many times have you heard this one, or something similar to it? “We have a new trading system that is guaranteed to make you 20 percent a month!”
Of course, my first reaction to this (which is right) is hey, if this person has a system where he can make 20 percent a month in the market, then why would he be selling it to you and me?
And of course, the hustlers tell us they have all the money they need — they “just want to help others.”
Yet we want to believe it. We want to make fast money, so we throw our good sense aside, and plunge into some ridiculous trading system that turns out to be like any other trading system — flawed. Dorothy wanted to believe in the Wizard of Oz, and we want to believe we can find an easy way to fast money — but fast money systems, like the Wizard of Oz, are just another scam.
James Cramer, the well-known trader, CNBC commentator, and founder of TheStreet.com, is a good example of this type of thinking.
If you go back and look at the February-to-May period of last year, he was all out bullish, touting tech stocks to anyone that would listen. He said it was over for those that were long-term investors and constantly took personal swipes at Mr. Buffett’s style of investing. He once even went so far as to suggest that the only way Mr. Buffett could keep up his fantastic track record would be to hire him to buy tech stocks for him.
Who is laughing now?
Fast forward to one year later. Mr. Buffett, ever the tortoise, is chugging along, successful as ever. Mr. Cramer, after bailing out (or was he pushed, as some suggest, from the hedge fund for whom he worked) is not even in the game anymore.
Mr. Cramer admits he was “burned out” and wanted to spend more time with his family (we have all heard that one before haven’t we?).
But, the fact is that right now the hares (who were mocking the tortoises this time last year) are lying by the side of the road, licking their wounds and are barely surviving.
Now, look at Mr. Buffett. His business is thriving, he is making many acquisitions, and his cash flow is as strong as it has ever been. He stands strong and tall, proving once again that his long-term strategy beats any kind of in-and-out trading strategy. Not for three weeks or three months or even three years, but for the long haul. The only kind of “track record” that counts is your long-term track record.
So, what does that mean to you, the individual investor?
I believe it means that you shouldn’t waste any time on market timing. From what I can see, it is useless.
Those with the best long-term records concentrate on buying stocks that will be good for a long time.
This kind of talk makes the in-and-out crowd hopping mad. They hate to hear this kind of stuff because in their hearts they still think they are smarter than Mr. Buffett is. Don’t believe that for a minute. The facts show that they are wrong. You should take heed of this undeniable reality; abandon the hares, and join the tortoises.