STREET DOGS: Risk and reward
’The years ahead will occasionally deliver major market declines – even panics – that will affect virtually all stocks’ – Warren Buffett
A reminder from the 2017 Berkshire Hathaway shareholder letter: "The years ahead will occasionally deliver major market declines – even panics – that will affect virtually all stocks. No one can tell you when these traumas will occur, not me, not Charlie, not economists, not the media." Meg McConnell of the New York Fed aptly described the reality of panics: "We spend a lot of time looking for systemic risk; in truth, however, it tends to find us." During such scary periods, you should never forget two things: first, widespread fear is your friend as an investor, because it serves up bargain purchases. Second, personal fear is your enemy. It will also be unwarranted. Investors who avoid high and unnecessary costs and simply sit for an extended period with a collection of large, conservatively financed businesses will almost certainly do well. So, essentially, those with a long investing horizon who view favourably the equity markets hitting new highs have it backwards. Buying stocks...
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