Wednesday, September 17, 2014

Dont follow the herd if you want to buy low and sell high

My regular readers must have realized by now that I am not a great protagonist of “Big Government” with all its agencies (including the Fed) since it is thwarting economic growth. One of the reasons is that once government becomes excessively large, its laws and regulations also become extremely complex and hence cumbersome. 

With few exceptions hedge funds have under-performed most indices including gold and longer-term Treasury notes in 2014. Particularly disappointing was the performance of “Global Macro Hedge Funds” and “Equity Long/Short Hedge Funds.” 

Finally, veteran investor Kahn observed that, “I would recommend that private investors tune out the prevailing views they hear on the radio, television and the internet. They are not helpful. People say 'buy low, sell high’, but you cannot do this if you are following the herd. You must have the discipline and temperament to resist your impulses.”

I think most investors tend to forget these very simple principles, which will over time lead to a satisfactory performance.