1. “Nobody knows what the market will do.” Investing based on macro market forecasting is folly. Every investor in this series (over 20 now) believes in this bedrock principle. Where are the great investors who believe to the contrary? Where is the list of great investors who outperform the market based on macro forecasting? You may be thinking: “Ray Dalio at least.” A 25iq post on Ray Dalio is coming soon.
2. “Forget the level of the market. The only thing that matters is the specific situation having to do with your stocks.” It is by focusing on understanding the very simplest systems (an individual company) that an investor can outperform the market. And more importantly, when you buy a stock for significantly less than its intrinsic value you do tend to catch a favorable wave caused by inevitable but unpredictable shifts in the economic cycle. You won’t time business cycles perfectly but you will find that they tend to work in your favor. In other words, focusing on what a company is doing today by itself positions you well for tomorrow. And you have a margin of safety against mistakes and errors. If Bill Ruane has been put in a cave for many years and given no information about the general economy he would time business cycles well if all he had was information about the value of individual companies.
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