I have travelled far and thought so much and all that has
happened is I've come home.

From the movie Gandhi

The answers are before you and what's more they are the most obvious ones. But to believe them you seem to have to travel a long and possible convoluted journey

The economist looks at the forest and glances at the trees. The investor looks at the trees and glances at the forest.

Intellectual Framework

Some information may offer the promise of answers but they don't deliver. Investing requires that you focus on the business and less on the economy.

When there is a stock-market boom, and everyone is scrambling for common stocks, take all your common stocks and sell them. Take the proceeds and buy conservative bonds. No doubt the stocks you sold will go higher. Pay no attention to this-- just wait for the depression which will come sooner or later. When this depression-- or panic-- becomes a national catastrophe, sell out of the bonds (perhaps at a loss) and buy back the stocks. No doubt the stocks will go still lower. Again pay no attention. Wait for the next boom. Continue to repeat this operation as long as you live, and you'll have the pleasure of dying rich.

Fred Schwed Jr, Where Are The Customers' Yachts ?, 1940

Mr Schweb interesting observation in the second half of the paragraph in which he notes that when you sell out of bonds to buy equity, you maybe selling at a loss. Graham notes the same thing in both the Intelligent Investor and the Security Analysis. The point here is that good corporate bonds will not save you when the market turns down in times of maxmum fear.

Mr Schweb is also assuming that the loss will be smaller compared to the loss on equity. This is probably true provided you have chosen the bonds well.

A better alternative that might actually go up when national calamity strikes is government treasuries. It is interesting to note that Buffet did exactly that with his own personal portfolio. This came to light when he penned an article in the New York times in 2008. In the article advising readers to buy America, he also mentions that his entire portfolio was in US treasuries.

Success requires the work of generating ideas and capital. It requires the wisdom to differentiate between good and bad ideas. It requires the patience to wait for opportunity, then for results. The courage to act when your data and logic tell you and not what the market says. The temperament to do nothing when there is nothing you should be doing. The competence to manage the business and above all luck

Intellectual Framework