…when others were fearful. The greatest investor of all time and my neighbor down the street once said that as an investor it is wise to be fearful when others are greedy, and greedy when others are fearful. Warren Buffett’s classic quote is easy to remember but difficult to put into practice. Environments like our markets saw just weeks ago when investors were just “sure” a major market selloff was just around the corner, are especially trying. As financial news peddled out recession warnings, yield curve fears and apparent signs of economic growth slowing, the thought of buying a stock or other security seemed maniacal.
These are precisely the times when astute investors are working harder, pouring over the marketplace looking for deals they may otherwise pay full price for. I found once such deal weeks ago in the midst of another synthetic Armageddon cast over the investment landscape.
The above was me, trying to be an astute investor. Knowing full well others that were fearful, I was greedily looking for opportunity and found just that in a company called Audiocodes ($AUDC), a designer of voice over IP and data networking products. From a fundamental standpoint this is a company that has been steadily growing sales and EPS, and whom recently reported a great quarter year over year. From a technical perspective, same story. Institutional volume present and the stock sold off into a long term level amidst media generated turmoil. Here was a look at the chart on August 23rd, marked with the green arrow and the ensuing breakout.
One of the greatest lessons to remember in investing and in life is that doing today what others won’t so tomorrow you can do what others can’t. It won’t always work out that way, but it sure tips the odds in your favor.
I bought when others were fearful. You can guess what I will be doing once others become greedy.
Trent J. Smalley, CMT