The way to thrive is to understand what will push a companys stock price significantly up or down. A great company in which the stock price does not advance aggressively is not a great investment. There must be something compelling to drive prices and you cannot get distracted from that necessity. Income must be generated from stocks that fail to advance, use options where appropriate, and dig deep to find real information that will impact the business. In Best Life magazine, May 2008, there was an article titled Bear Country about a fund manager that lives on a profitable 108-acre farm, which seems to be the most interesting thing about him from the article because his advice for thriving in a bear market was:
- Study, dont trade
- The one constant in the market is change
- Follow scandal
- Look for cash
- Buy franchises
- Sustainable growth trumps fast growth
- A dull company can be an exciting stock
- Beware the torpedo stock
- Be greedy when others are fearful
- Know the P/E ratio
Ultimately, not much of this matters; he admits his fund lags behind in strong markets but said his fund should do better in a down market. His fund doesnt seem to have any experience with stocks that go up far and fast the powerful winners. He said he spends 10 to 12 hours a day reading newspapers, company reports, academic studies, and even the Progressive Farmer to isolate companies with strong franchises, consistent earnings growth, and an abundance of cash. There isnt enough good information to fill up 10 or 12 hours in a day. No one is going to worship you for playing the game cautiously in competitions we value those that risk and win big. You cannot find that same kind of glory in being overly cautious as way to hold your performance back; there is no substitute for action.