Warren Buffett and myself are poles apart when it comes to how we analyse stocks but the adage he oft rolls out is relevant to us all.
Consider this: A farmer inherits a farm with no debt from a generous ancestor. The farm will have a few good years and bad years. Buffett likens the stock markets noisy volatility to a noisy neighbour yelling out a price every day to the farmer at which he can either buy my farm of sell me his. The prices varied widely depending on the noisy neighbours state of mind. It the daily shout out price was ridiculously low I could buy his farm or if the price was absurdly high I could either sell to him or just go on farming.
Despite their apparent significance events such as the Brexit represent little more than the noisy neighbour panicking that his farm might fall further in price. The many ‘wild’ events inflicted on us in the stock market can be considered little more than that and luckily for the farmer the noisy neighbour doesn’t exist so he just goes on farming devoid of the daily distraction of changing prices.
If you have done your work either fundamentally or technically stand by you company and don’t be rattled unnecessarily. It is why I focus on the weekly time frame. It helps shut out that dam noise! The fear emanating from such events can be a distracting force but as always the only winners from these events are the parasites that make money from the stock market merry go round of fees and costs not those investing in stocks. Slowly I believe investors are getting smarter and wising up to that and taking back control of their own investments with a little help and guidance for the humble independent stock picker.