Blog | Pillar Capital

Success in investing doesn't correlate with IQ... what you need is the temperament to control the urges that get other people into trouble in investing. - Warren Buffett

It's been curious to watch people load up on toilet paper, water and other necessary family staples in response to Covid-19. Long lines exist at every Costco throughout the country - primarily so people can load up on commodities which there appears to be little risk of running out of in the future.

I've asked myself why people feel a need to stock up on these items when there does not appear to be any logical reason to believe there will be changes to the supply of paper products through automated manufacturing lines or to potable water through our public water systems. My conclusion is this: people are feeling powerless in their ability to protect their families from Covid-19. Purchasing these products is part of the natural desire to "do something" when faced with a crisis. People are hard-wired to have a "fight or flight" response - an instinctual psychological reaction to a perceived threatening situation.

Likewise it is difficult to watch as portfolio values seem to decline daily. Unfortunately, in the case of investing the hardest thing to do emotionally - "nothing" is also the best thing to do to preserve and secure your financial well being. In my experience the only behavior which produces better results than "nothing" is to commit dry powder to your investments when they have done the worst.

The greatest investor of all time (Warren Buffett) is famous for saying he is greedy when others are fearful. There is no doubt in my mind what he is doing. He is buying companies and hopes for things to go lower so he can buy more. Let me be clear that things will get worse for Covid-19 and may get worse for the price of our investments.

With great confidence we can say that our country and our economic system will survive and thrive and life will return to normal in the next year - NOT decades. Because prices are down stocks are LESS RISKY now than they were a month ago. We will look back at this as perhaps the greatest opportunity in our lifetime to be an investor and to get great returns.

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