Don't be a seller when you should be a buyer

It's easy to lose sight of the long-term when markets are as volatile as they are today, making it critical not to let emotions drive investing decisions.

Dear Reader, today I want to share with you some thoughts that I believe will tremendously help us all stay level-headed in these highly volatile markets. Please feel free to share your thoughts in the comments as well.

Sentiment

Sentiment is a fickle thing. Sometimes, it seems the market is looking for everything to be good, and not asking enough questions about what isn't working or what to be worried about. Sometimes it seems the be opposite is true. The market is convinced things are bad and is so confident that something is wrong, that it can ignore good news and positive things that are happening. Most of the time, we're somewhere between these 2 ends of the spectrum.

- Scott Nuttal, co-CEO, KKR & Co

I love the way Scott has articulated his thoughts about market sentiment. If we look closely, this is exactly what is happening today. Businesses with excellent economics are getting hammered today for no other reason than weak sentiment. Last year, this happened to Alphabet ($GOOGL), and a year later, the stock has almost doubled.

I strongly believe that most opportunities today are created because of sentiment rather than an information gap. If you have done your due diligence, if you are confident about the business you are investing in, don’t let the market’s sentiment get in your way and distract you. As an investor, the goal is to find stocks that are down because of sentiment, whereas the underlying business is doing well.

In the short run, the market is a voting machine, but in the long run, it is a weighing machine. - Benjamin Graham

Geopolitics

In the fullness of time, all geopolitical events pass... if you have good businesses in great places and keep compounding returns, you'll earn excellent long-term returns.

- Bruce Flatt, CEO, Brookfield

I agree with Bruce’s thoughts about geopolitics. In these past few years, geopolitics has seemed to have gotten really messy, which creates lots of uncertainty for investors. Just like Apollo’s Marc Rowan says, the balance has changed from 90% focus on investments and 10% on geopolitics to 30% on geopolitics and 70% on investments.

However, it is important to remember that eventually, this too shall pass. The goal is to be patient and keep adding businesses to your portfolio that are resilient and will emerge even stronger once the dust settles.

Value Investing

Value investors have faith that, one day, the stocks they are buying now for 50 cents on the dollar will trade at par. They also don't worry too much about how long it will take because they think par is a moving target and it's moving up. The payoff might come as a result of persistently good earnings that finally get noticed, or a sentiment shift, or a takeover. Whatever. The important thing is to get a full position before the price moves.

-Martin Braun

With so many posts on X or Reddit from people posting 100%, 200% or more gains in a realitively short periods, you might feel left behind, especially when you are just starting out. It might appear to you that the undervalued stock that you bought might stay undervalued forever, and you might be inclined to jump ship. But it’s important to be patient and keep building your position as the market will eventually recognize that undervalued opportunity and your payoff will be sizeable.

A stock can be cheap at its all-time highs and expensive at all-time lows. There is a difference between price and value.