Ever notice that the most brilliant hues of light come when the sun is wrestling with the darkness? So it is with life and money.
December, 1986.
My temporary student job ended two weeks before Christmas, and I needed money for school, food, rent and whatever Christmas I could muster.
At the foot of the old Port Mann Bridge, on the Surrey side of the Fraser River, is a substantial rail yard facility where my roommates and I landed a temporary job cleaning coal cars. The procedure involved climbing on and into to the rail cars and power washing from the top down, inside and out.
Since we were young and fit, we saw it as a contest, but by the end of each day we were exhausted, and covered in coal dust from head to toe, our faces blackened by the earthy smudge.
When the contract was completed, we collected our little Christmas cheques, which were not accompanied by any sort of seasonal cheer, but a terse, obnoxious letter from an absentee boss. Dickens would have been proud.
After paying the bills I had scant cash to see me over the break.
Determined to avoid debt, I called my Prince George girlfriend and told her I couldn't afford the trip to see her. Back then, there was no such thing as Skype, or email.
Long distance telephone charges were exorbitant. Love grew largely through patient, hand-written letters. (I'm like some sort of artifact here).
I slumped on to the couch and resigned myself to a Christmas alone in the dark when my roommate, a distant relative of mine said: "Cousin! Life doesn't add up. Just go!"
After spilling out my last few dollars onto a Greyhound ticket counter for a return trip to Prince George, I rode all night on a crowded bus, squished the entire way beside a very large man who chain-smoked and smelled of bad cheese.
The bus pulled in to the Greyhound depot in Prince George at around 10 a.m. I hadn't slept all night. There were dark circles under my eyes and probably coal dust behind my ears.
Just then a beautiful brunette walked out of my dreary mind and briskly across the parking lot with a radiant smile. And it all began to make sense.
Making good choices with long term investments involves a good fundamental understanding of the quality of your choice, as well as a good strong stomach for calculated risk. The darkest moments are sometimes the most telling.
Sir John Templeton, a famed value investor with quotable results, made the habit of seeing light before it dawned on others. He searched for companies around the world that traded at depressed prices and had an excellent long-term outlook.
"It's not easy," he states, "but if you're going to buy the best bargains, look in more than one industry, and look in more than one nation."
The job is not to try to time the market so much as to look for solid companies on sale.
There is a difference. As Warren Buffet said: "Let me be clear on one point: I can't predict the short-term movements of the stock market. I haven't the faintest idea as to whether stocks will be higher or lower a month - or a year - from now. What is likely, however, is that (eventually) the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up."
Fundamentals persist in all market conditions - pay attention to fundamentals such as consistently strong cash flow, quality management, industry prospects and modest debt levels. Then do as you would when buying a car.
Get a good deal regardless of the weather forecast that day.
Buffet goes on to say: "To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation's many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But... in waiting for the comfort of good news, (most people) are ignoring Wayne Gretzky's advice: "I skate to where the puck is going to be, not to where it has been."
I must here repeat Buffet's mantra. I have no clue where the market is headed overall in the next few weeks or months. Nobody does. But experience has shown that the patient analyst with a good strong flashlight will find some good deals long the way.
This is not necessarily a buy signal, although recent lows do quicken the senses. Overall, it is the same signal used in any market condition. Analyze the basics and move ahead where it makes sense.
Mark Ryan is an advisor in Prince George with RBC Wealth Management, Dominion Securities, and can be reached at [email protected].
