A thought after being up at the cottage (March 2009) looking through Philip A. Fisher's Common Stocks and Uncommon Profits written in 1958. Fisher began his investment career in 1928. The last line of Fisher's book was the first line of the quotation below. Older books like this are worth reading again now when were are in a most serious financial crisis.
Interest rates are low: it's not a good time to buy term deposits. Yields on common stocks, on the other hand, are high. Is it time to “take the current”?
- “There is a tide in the affairs of men,
- Which, if taken at the flood, leads on to fortune;
- Omitted, all the voyage of their life
- Is bound in shallows and in miseries.
- On such a full sea we are now afloat,
- And we must take the current when it serves,
- Or lose our ventures.”
Shakespeare, Julius Caesar
- Have prices sunk? “The benefit to staying liquid and holding a large amount of cash even though it is low yielding is that you are prepared to take advantage of asset prices when they sink.” from Contagion by John R. Talbott p.166. I do not plan on finishing Contagion.
In 1983 prices had sunk. If you had bought the DJIA then you'd be up 600% now. If you had bought the DJIA in 1998, on the other hand, you'd be below water now. Valuation is everything.
What about March 2009? Was it a good time to buy? It could have been. Time will tell. I don't see how one can lose buying at those early March 2009 lows. The only question is: will they be re-visited? I think so.
“the best time to invest is when others are at their most pessimistic, a philosophy which sounds simple but in fact requires rigorous self-discipline to put into practice” from the Money Makers by Jonathan Davis, p 214 referring to Mark Mobius and the Templeton approach.