Following Warren Buffet's Path Amidst Current Market Turmoil

We live in unprecedented times of dark ages when something invisible to the naked eyes has restricted the humankind within the four walls. We can’t believe a sixteenth century physician and possibly a clairvoyant, Michele de Nostredame, popularly known as Nostradamus, authored his prophesies in four lined poems. He had way back predicted an outbreak of a Coronavirus from the far east.

Source: Twitter

As on 4 April 2020 (1:52 PM AEDT), the global SARS-CoV-2 confirmed cases exceeded 1,099,389. Looks like the figure will surpass the 1.1 million mark in no time. What is the solution to epidemic, when so many have predicted it?

Guess none of them actually predicted the solution to this.

What do WE predict? Nothing, we are no Nostradamus.

The unprecedented virus spread has jolted investor sentiments, disturbing the dynamics of equity markets. However, there is one wizard, the nonagenarian Dumbledore of our times - Warren Buffet.

Global exchanges have been hit hard with the rising cases of Coronavirus globally and the record weakening of the world’s most important commodity crude oil in the past 18 years, mostly due to the weak demand and the price war between Saudi Arabia and Russia.

As the S&P/ASX 200 has dwindled by over 25% in the trimester, the exchange could face some more pressure if the coronavirus cases continue to grow in the country.

As per the media reports, if the outbreak is not stopped, the Australia’s benchmark stock index could plunge as much as 50% from the last year end values.

Although, it is pertinent to note that the ASX is still managing to perform better in these grim times in comparison to the global indices.

As the new cases continue to add up, the total confirmed cases count as on 4 April ,2020 2:21 PM AEDT reached 5,330 in Australia, including 649 who have already recovered from the deadly virus.

It is important to note that with the announcement of the stimulus package and the slowing down of the daily frequency of fresh confirmed cases in Australia, relatively less volatility has been observed in the ASX in the past few days.

With the stimulus package, including the Reserve Bank’s monetary policy initiatives coupled with fiscal reforms, the stock market has picked up steam. But that’s not enough, we do not know how much time it would take the economy to recover from the aftereffects. In this

regards, investors looking to safeguard their existing portfolio and perhaps build on their investments may look into Warren Buffett’s approach of value investing.

The time is of the essence to transition to a secured, less risky yet rewarding, value investing. We, at Kalkine, believe in the values passed down by the iconic economist and investor Benjamin Graham. Warren Buffett also support the long-term value investing approach of Benjamin Graham.

Warren Buffett believes in investing in equities with strong fundamentals, backed by extensive research and holding them for long term.

Here are some of the mantras exclusively for the Kalkine family to perhaps look at during the current market turmoil-

Invest In Stocks With Long Term Opportunities

The iconic investor believes that most of the market participants lose out their patience to greed or fear of losing out money and change their investing criterion hastily.

In fact, one must avoid any bias from the external forces which might affect the emotions. Mr Buffet also suggests avoiding any panic selling. The equity markets are here for long and would provide you with opportunities to buy and sell, and panic selling does no good but might turn out to be a bad call at times.

Research And Find Out The Hidden Treasures And Dark Horses Of The Industry

Extensive research is a must for investing, one must never invest without diligent research.

Mr Buffett believes in investing in the companies, he personally believes would outperform its peers. So, what others think is not important, but your own view is the sole thing that matters. If that wasn’t the case, the world would not have observed “The Big Short” in the times of the 2007-08 global recession.

Invest In The Segments Of Business That You Understand

Warren Buffett invests in the companies he knows in and out and believes have stable revenue streams for the next 15 years. First, study the industry and its outlook for the upcoming period and then go for the stock’s fundamental research. This will help you in developing a better understanding of the business segment of the company and also will give you an appropriate view on the industry level.

Do Check The Company Level Metrices

Invest the companies like you would own it. One must look at the important company level metrics such as Enterprise values and dive into anything which appears sketchy. Stay away from the stocks that you think are overpriced at their current market prices.

Look Out For Companies Offering Competitive Benefits Over Its Peers

One must seek companies that control brands with consumer appeal or own any strategic assets or have some additional advantages such as lower product pricing, such equities are expected to have the ability to continue performing well in the both good and adverse times.

Be Patient And Enjoy The Compounding Effect

In order to reap the benefits of your investment, you need to be patient. The long-term value investing leads you to the exponential growth that you would have missed out on. Keep investing in companies with strong fundamentals with patience and a broader long term perspective!

Disclaimer

This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.