Patriotic Buying


Patriotic Buying:

Great in principle, bad in practice.
The market re-values companies every second
of every day. Did anyone out there think airlines, insurance, or leisure stocks
were worth as much post September 11th? Of course not. They were not worthless,
but they were indeed worth less than prior to the attack. Outside of those
sectors, the rest of the world changed, but not as much as for the above


If you have a
death wish you could step in front of a freight train. If you wanted to be
patriotic, you could wily-nilly buy stocks as they are falling. I cannot and
would not council any investor to do that. However, I would selectively pick
stocks that I would buy at various levels. This is exactly what hundreds of
successful mutual fund and hedge fund managers did. They said the world has
changed, but is not done, so they set VALUE LEVELS and looked for
stocks that met their criteria.


I think it’s
important to note that there is always a buyer for every seller but they
need to find equilibrium. When we are not in a state of equilibrium,
we see rallies or sell offs, depending on the investment climate. Since all of
us knew a sell-off was coming as the market was seeking that
equilibrium at lower prices, patriotic buying was ludicrous. Buying at
such a time was not patriotic, it was idiotic. When stocks represent a
value versus other investments, that’s when you should buy, not when some
talking head tells you to be patriotic with your money.

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