(1) “For some reason people take their cues from price action rather than from values. Price is what you pay, value is what you get.”
If you own a company with total assets of $1M and someone offers you $700,000 – do you sell even though the price is less than the value? In reality, too much emphasis is placed on the ‘price’ of an investment and value is ignored.
To be successful it is important to look past the “hype” of prices and instead focus on the value, which is a growing income stream and capital growth in that order.
(2) “You should look at stocks as small pieces of a business.”
When you invest into a business, you invest in an interest in the product, human capital, marketing, office space, factories etc. You share in the profit of the company by the way of dividends and growth in the company through the increase in the value of your investment. People often narrowly view their investments as price movements on a screen.
(3) “We do not have, never have had, and never will have an opinion about where the market, interest rates, or business activity will be a year from now.”
Making forecasts on economic conditions, company earnings, interest rates or the direction of the market will typically result in an investor buying and selling their investments at the wrong time. Successful investment outcomes are not contingent on making accurate forecasts or needing a crystal ball.