Fear of the Unknown

One of the great things about the internet, is the steady stream of great content being put out on a daily basis. At Northwood, we subscribe to a number of different newsletters, blogs and podcasts on investing and the wealth management industry. And unlike when I joined the company in 2006, the vast majority of this content is now free.I was reminded of this in January when Salman Ahmed at Steadyhand shared the following quote from Warren Buffett’s 1994 letter to Berkshire Hathaway shareholders.

We will continue to ignore political and economic forecasts, which are an expensive distraction for many investors and businessmen. Thirty years ago, no one could have foreseen the huge expansion of the Vietnam War, wage and price controls, two oil shocks, the resignation of a president, the dissolution of the Soviet Union, a one-day drop in the Dow of 508 points, or treasury bill yields fluctuating between 2.8% and 17.4%. But, surprise - none of these blockbuster events made the slightest dent in Ben Graham's investment principles. Nor did they render unsound the negotiated purchases of fine businesses at sensible prices. Imagine the cost to us, then, if we had let a fear of unknowns cause us to defer or alter the deployment of capital. Indeed, we have usually made our best purchases when apprehensions about some macro event were at a peak. Fear is the foe of the faddist, but the friend of the fundamentalist.A different set of major shocks is sure to occur in the next 30 years. We will neither try to predict these nor to profit from them. If we can identify businesses similar to those we have purchased in the past, external surprises will have little effect on our long-term results.

These are wise words that align perfectly with how we think about long term investing at Northwood. Thank you to Steadyhand for digging this quote out of the archives, and thank you to the internet for allowing us to find it. Salman’s Original Post

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