Respect the Historical Evidence
Earlier this week, I posted a comment on Twitter saying that the amount of intellect and energy spent on guessing the short-term fluctuations in the value of corporations was staggering. Most who try to game the underlying corporate value on a daily basis fail to beat the market itself, so it would seem to me that much of that time is wasted. Some of my more active friends insisted that my approach is not practical or realistic. They scolded me, saying that waiting for the markets to fall before becoming an aggressive buyer is foolish and causes one to miss the big moves.
Clearly, I disagree. Since I first read the story about Womack the pig farmer when I was a new broker back in the 1980s, buying big down moves in the market just makes sense to me. For those of you not familiar with my pig farmer friend, he was introduced by John Train in an article in 1978. Womack would come into town when the markets were in a free fall and buy shares of several profitable dividend-paying companies that had fallen below $10. He would hold them for a few years and when the news was all sunshine and candy, he would sell his stocks for very large gains. He treated stocks like pigs and bought them when the market was weak and sold them during BBQ season. (Womack was quick to point out that pigs don't pay dividends.)...521 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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