The Best Time To Buy Blue-Chip Bargains

Waiting for a decade to buy Cobham? I cannot believe that that is worthwhile although it depends what you have done with the funds in the meantime I suppose. I admire his patience but I am much more likely to buy the target at what seems to me a reasonable price - or move on.

Lost opportunity cost and alll that.

Timing is also about intuition. Intuition is subjective, personal. Generally I ignore the beatings of the media and knee-jerk reactions of private investors, many of whom don't have a clue about what they are investing in and are heavily dependent on what others are saying. When you go it alone and 'tune in' to the mood of the market, the market's assessment of the company, and the company itself, (often needing to read between the lines of the CEO/chairman/PR hype and so on) then I find it possible to sort the wheat from the chaff. I think it also pays to focus on and have an understanding of a particular industry sector so as to be able to form a balanced conclusion. It is said the city is overly concerned with short-term results and performance but I think that's right: if you only take the long view that places a great deal more trust on the company's directors/managers to steer the right course through thick and thin.

On balance, smaller companies are more likely to have the right idea nowadays because the days of thinkers like Arnold Weinstock are long gone. The average tenure of CEO's of large companies is about 5 years or so: they either leave before the market discovers they've got it wrong or are pushed out when they overstay. From that individual's point of view none of that matters because likely they'll get a substantial pay-off but from an investor's perspective it does because often the successor will undo most if not all the initiatives of the predecessor and all that costs money.

For example, the best time to buy retailers was during the early 1980s when most sps were below (tangible) nav. Similarly, the best time more recently to have gone into property companies was when the world fell apart thanks to Lehman.

Sharp falls in the index caused by unexpected non-company related events are buying opportunities. On the day of the London bombings, I bought into Land Securities at about £13; shortly after the sp bounced back to £18 or so. Post-Lehman, LS had a deeply discounted rights issue at about £3.70 or so and have since doubled. I lost interest in LS years ago when I concluded it had gone ex-growth, so only give it as an example.