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MARKET COMMENT
By
Carburton Street, London -- A common word used by investors these days is "uncertainty". Even before last week's tragic events, economic uncertainty in the US, and its possible effect on the UK, dogged investors' thoughts. But whatever business leaders continue to say about economic "visibility" in their respective industries, don't fall into the trap of waiting for a "clear future" before you make your next share purchase. You see, the economic future is inherently uncertain. Regardless of what the experts may say, nobody knows for sure what's just around the corner. Go back eighteen months. With the benefit of hindsight, how many people accurately predicted the dotcom crash or the US economy suddenly slowing? Not many, I bet. In my view, it's a mug's game to try and predict any specific economic prospects, short, medium or long term. Indeed, ordinary shareholders need only know two basic economic rules: i) upturns always follow downturns, and; ii) downturns always follow upturns. Waiting for the future to become "clear" will almost certainly prove futile. For instance, those investors who sat through an "uncertain" 1974, a year when the stock market plunged 50%, more than likely missed out on the recovery. The first few weeks of 1975 promptly saw the stock market double. So get this. When using a crystal ball, just concentrate on companies. Try to determine how sustainable the competitive advantage of a business is. Regardless of the economic background, certain companies have products or services that will ensure they will remain a dominant industry force. For long-term investors, knowing that economic uncertainty is part and parcel of the stock market, it is these businesses you must seek. Of course, finding the right sort of long-term business is one thing. Buying at the right price is another. But a desire for obvious and immediate value and a margin of safety will limit any shareholder disappointment in this respect. Remember, whatever the stock market is doing, and whatever people are saying, successful long-term investing will always centre on investing in superior companies at attractive prices.