Is it OK to underperform the market?

Some mutual funds require fund managers to stay fully invested. Sometimes, large investors in a specific fund stipulate that the fund avoid holding cash.

Mr. Will Browne, a manager of Tweedy, Browne Global Value Fund whose fund holds nearly 17% cash said he pushes hard against such demands.

He prefers to buy companies at prices that are lower than what an informed buyer would pay in an acquisition. If he cannot find them, he is prepared to lag behind market returns for a while.

Source:
The Business Times, 9 Oct 13, page 36

Sounds familiar?

"In the pursuit of passive income, it makes sense to do a bit less pursuing and, instead, be pursued."

Source:
$15,000 passive income. To pursue or be pursued?

It is OK to underperform the market in the short term. Don't feel compelled to put all our money to work here and now. It is more important that we have the resources to load up on undervalued stocks as and when they appear in future.

“In the short run, the market is a voting machine, but in the long run it is a weighing machine.” Benjamin Graham. In the long run, the true value of a stock will be reflected in its price. Don't be too bothered with the short run. The long run is what really counts.

Related posts:
1. When to be fully invested in the stock market?
2. Little Book of Value Investing.

Romance of the 3 Counters: Blumont, Asiasons and Liongold.

Romance of the 3 Kingdoms, despite the elegant name, is about a bloody past in China.

Blumont, Asiasons and Liongold remind me of the 3 sworn brothers, Liu Bei, Guan Yu and Zhang Fei. Are the 3 counters just just down on their luck? Could they not regain the lofty heights attained only a few sessions ago?

Today, the counter opened at 30c, 17c higher than the closing price of 13c yesterday! To those brave enough to buy at 13c yesterday, congratulations. Short covering in progress, perhaps?

Like I said on my Facebook wall, I hope no one was exposed or overly exposed to the carnage. I wonder if people would look back and romanticise this whole episode when it finally ends.

Of course, I also wonder if there will be an episode 2.

Blumont Group Ltd, Asiasons Capital Ltd and LionGold Corp Ltd have shed up to S$8.7 billion ($7 billion) in combined market value since Thursday's close, transforming the companies back into the penny stocks that they once were before the strong run-up in their shares this year.

Source: REUTERS