Analyze the Future
As a teen, I would often watch Lou Dobbs on TV when he worked at CNN. In the Caribbean we didn’t have much choice about what channels we could watch.
Lou always had some interesting guests that discussed the economy, the markets and politics. I started becoming fascinated with investing and researched top investment managers. One name rose to the top and that was none other than the mighty Warren Buffett. What I liked about Warren Buffett was that he was humble, smart, patient, invested in what companies he understood and he buys when companies are undervalued. One of Warren Buffett’s most famous quote was “ Rule No. 1: Never lose money. Rule No 2: Never forget rule number 1”.
Naturally, I wanted to know how Warren Buffett learned all he knew about investing and I discovered that he was a disciple of Benjamin Graham. One of the books Buffett highly recommended was The Intelligent Investor by Benjamin Graham. Staying true to Buffett’s strategy of Value Investing, I found a copy at Half Priced Books for $2.99. Why is Value Investing so important in this current economic climate? Since the financial markets crashed in 2008, the Dow Jones Industrial Average (DJIA) has been on a steady increase.
The NASDAQ and S&P 500 have a similar trend line. Is the upward trend sustainable? I don’t believe it’s sustainable. I believe the market will make a correction which means that both healthy companies as well as unhealthy companies will be impacted. It’s going to be a great time for Value Investors if you can identify good stocks because they are going to be on SALE!
What are the reasons I believe the market will correct? Everything seems to be going great. Well things aren’t really that great. Here is a short list of reasons why there will be a selloff in the market.
So how do you profit if there is a selloff in the market?
Investors in hedge funds take no prisoners. They expect hedge funds to make money whether the market is moving up or down. There is no morality, no questions about whether capsizing a pension fund which holds people’s retirement is the right thing to do. Watch Gordon Gekko explain capitalism.