Dear Long-Term Investors,
How are you?
Hope this finds you in the pink of health, and without itchy fingers.
After running through a 70-odd day corrective phase, the Indian markets don’t seem to be offering margin of safety (MoS) anymore.
Or so I feel.
The groove had become natural from mid January to the beginning of April.
There was something to be bought, almost everyday.
One would wake up thinking about what one would be buying for the long-term when the markets opened.
Over the last ten days, I haven’t felt like buying anything.
My fingers are itchy.
I’m raring to go.
However, margin of safety is not there.
It might return, in some form or the other, and that too soon. However, it doesn’t prevail just now, as per my understanding.
Where does that leave me?
I can now opt for compulsive buying. However, my market experience has taught me otherwise. It’s a simple rule – no margin of safety, no buying. Period.
I focus on other stuff.
I have a trading operation.
I focus on that.
I plan my summer vacation.
I attend to family matters.
There’s other business that needs attending.
However, I don’t resort to compulsive buying.
Can you stop yourself from compulsive buying? However itchy your fingers are?
It’s not easy. Nevertheless, it’s mandatory.
The follow-through energy from an existing groove needs to be diverted until it is fully dissipated.
If you don’t succeed with this, you’ll end up with over-priced buys in your long-term portfolio.
This spells disaster, because lack of margin of safety won’t allow you to sit when markets crash.
And crash they will.
Every market crashes, some time or the other.
That’s when your margin of safety allows you to sit quietly and sleep properly.
You then have the acumen to recognize the re-existence of margin of safety.
Also, you have the energy to act upon your identification of the re-existence of margin of safety.
You buy more, because MoS days are there again.