‘Patience is your most powerful weapon’: Thoughts from the Saltydog Investor

Remember that patience is your most powerful weapon. (Warren Buffett)

The last few weeks has certainly been taxing my patience, which is not one of my strong suits. I am now sitting with 75% of my investment portfolio in cash and it is burning a hole in my pocket.

The 25% balance is split between property, gold, healthcare/pharmaceutical and technology funds. The recent weeks have resulted in a balance between the rises of the property and gold, and the relative stability of the healthcare versus the losses of the technology funds.

The press seems to be full of speculation about which way the markets will move next.

There are finance houses advocating being fully in the market because after this correction the next move is a “melt up”(a new expression to me).

‘advocating being fully in the market because after this correction the next move is a “melt up”’

Maybe they really believe that, but more likely it is to put their own subscribers` and investors` minds at rest after their recent sizeable losses.

I said in my last article that I feel there are many reasons for the market to move downwards, rather like a theatre slowly filling with smoke – how long before there is a rush for the exit?

At times like this I revert to the sayings of Jesse Livermore to endeavour to control my urge to reinvest before the time is right.

The following are four of his many recorded sayings.

• It was improper and unwise for me as a speculator to allow myself to be influenced by any consideration to act against my own judgement.
• A man cannot be convinced against his own convictions, but he can be talked into a state of uncertainty and indecision, which is even worse.
• The trend has been established before the news is published, and in bull markets bear items are ignored and bull news exaggerated, and vice versa.
• One of the most helpful things that anybody can learn is to give up trying to catch the last eighth – or the first. These two are the most expensive eighths in the world.

With these maxims in mind I intend to stay with last month’s tactical retreat and will wait further until the time to reinvest becomes more obvious.

The only exception will be if the markets do continue to correct, then I will build up my holding in gold funds as in these circumstances they can be expected to pick up.

Douglas