As I strolled the streets of The Avalon this weekend with my daughter, I was surprised by the few Sale signs I saw in the storefront windows. I love getting a deal as long as it is the right kind.
Have you ever found a “great” sale to only later realize that indeed the item was cheap, but for a good reason? Investing can be kind of like that.
Sometimes there are companies on sale (and even cheap), but for a reason. While at other times there are really good values. Finding a good value that fits the overall structure of a well-defined investment thesis can be ideal.
Contrary to what you hear on the news and from many financial talking heads, though much of the market is currently at a premium these days, there are still some relative “deals.”
Sometimes even Quality companies become on sale – maybe not 40% off (rare most of the time anyway), but at a reasonable price for sure.
When a company is no longer on sale because its stock price has expanded so much (always good when this happens) it creates an opportunity to consider taking some of the profits and using those profits to either generate needed cash or re-allocate to other Quality companies that are more of a value relative to what they are worth for the long-term.
There is also an opportunity to possibly consider other Quality companies not yet in the portfolio. To get this right it is important to be process-driven and thoughtful.
As a rule, though not perfect, it is a good objective to strive to own Quality, financially healthy, and reasonable priced companies – within an appropriate diversified portfolio.
This can provide superior results practically and emotionally. The latter is perhaps the most important element of sound investing.
Don’t miss the stock sale opportunities this holiday shopping season!
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
– Warren Buffett