Out of touch

After 2 weeks in Mexico, i felt completely out of touch with financial news and stuff. Not having a fully functional laptop does not help.

Read and re-read Buffett's latest shareholder letter. Nothing calms me down better than reading his letters. In a world where everyone seems to be anxious over when will we hit the next low or when are we going to recover, Buffett timeless approach to business seems idiosyncratic. Find great company run be great manager, buy at fair price, repeat. Find mis-priced securities (stocks, bonds, insurance contracts, or derivatives) wait for mis-pricing to correct, repeat. Build a impreganable balance sheet, hold ample liquidity, minimise counter party risk.

Keynes wrote about liquidity crises years ago, "...the professional investor is forced to concern himself with the anticipation of impending changes, in the news or in the atmosphere, of the kind by which experience shows that the mass psychology of the market is most influenced. This is the inevitable result of investment markets organised with a view to so-called “liquidity”. Of the maxims of orthodox finance none, surely, is more anti-social than the fetish of liquidity, the doctrine that it is a positive virtue on the part of investment institutions to concentrate their resources upon the holding of “liquid” securities. It forgets that there is no such thing as liquidity of investment for the community as a whole. The social object of skilled investment should be to defeat the dark forces of time and ignorance which envelop our future."

I'm simply glad that i've followed simple asset allocation plan for managing my parents portfolio by following simple strategies put forth by David Swensen. When i lose my own money, i sleep reasonably well....but when i lose money that has been entrusted to me, i felt that i had let others down. Reviewing the investment policy, i believe that it is still sound and the portfolio should do relatively well over the next 5 years despite the recent calamity. However, 5 years seem like an eternity if u are fretting over the next market meltdown and thinking about how much the market has to rebound for you just to breakeven. Find great company run be great manager, buy at fair price, repeat....sounds easy, but will take me the rest of my life to master.