Thank You and Mr Market

My letter this month is to thank my clients, who I believe are the most loyal in the country. We are or have been through the most difficult stock market since the 30's. Have we seen the bottom? No one knows for sure but I hope so.

During this period, I have had clients call me to see how I was doing, not how the market was doing but, how I was doing and how I was holding up. I think this is just absolutely remarkable, and greatly appreciated.

I just want to assure you that the managers, institutions and support people that I deal with everyday are the most knowledgeable, experienced and honest people that I know in this business. I know that they appreciate your trust and confidence that you have placed in them, through me.

On behalf of myself, my wife, Donna and our assistant, Annette we would also like to thank you for your trust and confidence that you have placed in us. I would also like to assure you that we will work very hard to continue to earn that trust, confidence and loyalty.

As always, if you have questions or just need to talk, be sure to give me a call.

Again, a huge thank you and hopefully the worst is now or soon will be behind us.

P.S. The piece I did many years ago, "Mr. Market" is enclosed. Hope this helps a little.

Trying to Understand and Get Comfortable with

The following describes the mental attitude toward market fluctuations that we believe to be most conducive to investment success. You should imagine market quotations as coming from a remarkably accommodating fellow named "Mr. Market" who is your partner in a private business. Without fail, Mr. Market appears daily and names a price at which he will either buy your interest or sell you his.

Even though the business that the two of you own may have economic characteristics that are stable, Mr. Market’s quotations will be anything but. For, sad to say, the poor fellow has incurable emotional problems. At times he feels euphoric and can see only the favorable factors affecting the business. When in that mood, he names a very high buy-sell price because he fears that you will snap up his interest and rob him of imminent gains. At other times he is depressed and can see nothing but trouble ahead for both the business and the world. On these occasions he will name a very low price, since he is terrified that you will unload your interest on him.

Mr. Market has another endearing characteristic: He doesn’t mind being ignored. If his quotation is uninteresting to you today, he will be back with a new one tomorrow. Transactions are strictly at your option. Under these conditions, the more manic-depressive his behavior, the better for you.

But, like Cinderella at the ball, you must heed one warning or everything will turn into pumpkins and mice: Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful. If he shows up some day in a particularly foolish mood, you are free to either ignore him or to take advantage of him, but it will be disastrous if you fall under his influence.

Three of the most financially successful people know to Wall Street who have mastered this understanding and use "Mr. Market" to their benefit and this is what they have to say:

Warren Buffet, "We don’t have, never have had, and never will have an opinion about where the stock market, interest rates, or business activity will be a year from now."

Peter Lynch, "I have no feeling for the direction of the market over the near term or the next three to twelve months, and that has always been my position."

John Templeton, "Ignore fluctuations, do not try to outguess the stock market, buy a quality portfolio, and invest for the long-term."

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jpw@financial-architects.com
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