Recession fears sent the S&P 500 tumbling into a bear market last year, and the benchmark index is still down 12% from its high. But history says that drawdown is temporary. Every past bear market has eventually ended in a new bull market, and investors have no reason to expect a different outcome this time. That makes the current situation a buying opportunity, but not every fallen stock is worth buying.
Consider this investing advice from Warren Buffett.
Buy and hold high-quality stocks
Buffett once said, “All there is to investing is picking good stocks at good times and sticking with them as long as they remain good companies.” There are two important lessons there. First, valuation matters. A great business at the wrong price can be a terrible investment. Second, think long-term. Investors should ignore the day-to-day fluctuations in the market and instead focus on buying and holding good stocks.
But what qualifies as a good stock?
Invest in companies with a competitive advantage
In his 1995 letter to Berkshire Hathaway shareholders, Buffett wrote the following: “In business, I look for economic castles protected by unbreachable moats.” The term “moat” refers to a competitive advantage, the quality or qualities that protect a business from its competitors.
There are many different types of competitive advantages. Apple possesses immense brand authority that not only keeps consumers loyal, but also affords the company a great deal of pricing power. Amazon Web Services offers a broader and deeper suite of cloud computing products than any other cloud provider. Nvidia can design more performant graphics chips and data center accelerators than other semiconductor companies. Costco Wholesale derives significant purchasing power from its scale, and its operating expertise further enhances that purchasing power.
All of those stocks have crushed the S&P 500’s return over the past decade, and investors can attribute those market-beating performances to the fact that each company possesses a durable competitive advantage.
Buy stocks within your circle of competence
In his 1996 letter to Berkshire shareholders, Buffett wrote the following:
You don’t have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.
Buffett expanded on that advice a few years later. In his 1999 letter to Berkshire shareholders, Buffett explained that he typically avoids investing in technology companies — despite knowing their products and services will transform the world — because he finds it difficult to identify competitive advantages in that sector. In other words, Buffett avoids technology stocks because they are beyond his circle of competence.
Think carefully before buying or selling a stock
Buffett once said, “An investor should act as though he [or she] had a lifetime decision card with just twenty punches on it.” Those words should not be taken literally — Berkshire owns far more than 20 stocks. Instead, Buffett is telling investors to think deeply about every decision. Never buy or sell a stock on a whim.
Knowledge can pay huge dividends
Buffett once said buying Benjamin Graham’s book, The Intelligent Investor, was the best investment he ever made (excluding two marriage licenses). Graham is viewed as the father of value investing, and his teachings formed the bedrock of Buffett’s investing style. The message here is simple: Never stop learning. An investment in knowledge can produce incredible returns.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Trevor Jennewine has positions in Amazon.com and Nvidia. The Motley Fool has positions in and recommends Amazon.com, Apple, Berkshire Hathaway, Costco Wholesale, and Nvidia. The Motley Fool has a disclosure policy.
Tense diplomatic relations may not impact trade, investment ties between India, Canada: Experts
NEW DELHI: The tense diplomatic relations between India and Canada are unlikely to impact trade and investments between the two countries as economic ties are driven by commercial considerations, according to experts. Both India and Canada trade in complementary products and do not compete on similar products.
“Hence, the trade relationship will continue to grow and not be affected by day-to-day events,” Global Trade Research Initiative (GTRI) Co-Founder Ajay Srivastava said.
Certain political developments have led to a pause in negotiations for a free trade agreement between the two countries.
On September 10, Prime Minister Narendra Modi conveyed to his Canadian counterpart Justin Trudeau India’s strong concerns about the continuing anti-India activities of extremist elements in Canada that were promoting secessionism, inciting violence against its diplomats and threatening the Indian community there.
India on Tuesday announced the expulsion of a Canadian diplomat hours after Canada asked an Indian official to leave that country, citing a “potential” Indian link to the killing of a Khalistani separatist leader in June.
Srivastava said these recent events are unlikely to affect the deep-rooted people-to-people connections, trade, and economic ties between the two nations.
Bilateral trade between India and Canada has grown significantly in recent years, reaching USD 8.16 billion in 2022-23.
India’s exports (USD 4.1 billion) to Canada include pharmaceuticals, gems and jewellery, textiles, and machinery, while Canada’s exports to India (USD 4.06 billion) include pulses, timber, pulp and paper, and mining products.
On investments, he said that Canadian pension funds will continue investing in India on grounds of India’s large market and good return on money invested.
Canadian pension funds, by the end of 2022, had invested over USD 45 billion in India, making it the fourth-largest recipient of Canadian FDI in the world.
The top sectors for Canadian pension fund investment in India include infrastructure, renewable energy, technology, and financial services.
Mumbai-based exporter and Chairman of Technocraft Industries Sharad Kumar Saraf said the present frosty relations between India and Canada are certainly a cause for concern.
“However, the bilateral trade is entirely driven by commercial considerations. Political turmoil is of a temporary nature and should not be a reason to affect trade relations,” Saraf said.
He added that even with China, India has acrimonious relations but bilateral trade continues to remain healthy.
“In fact, bilateral trade is an effective tool to improve political relations. India must make special efforts to increase our bilateral trade with Canada,” Saraf said.
India and Canada have a strong education partnership. There are over 200 educational partnerships between Indian and Canadian institutions.
In addition, over 3,19,000 Indian students are enrolled in Canadian institutions, making them the largest international student cohort in Canada, according to GTRI.
According to the Canadian Bureau for International Education (CBIE), Indian students contributed USD 4.9 billion to the Canadian economy in 2021.
Indian students are the largest international student group in Canada, accounting for 20 per cent of all international students in 2021.
Benefits of educational partnerships are mutual and hence the current situation may have no impact on the relationship, Srivastava said.
Apple supplier Foxconn aims to double India jobs and investment
Apple supplier Foxconn aims to double its workforce and investment in India by next year, a company executive said on Sunday.
Taiwan-based Foxconn, the world’s largest contract manufacturer of electronics, has rapidly expanded its presence in India by investing in manufacturing facilities in the south of the country as the company seeks to move away from China.
V Lee, Foxconn’s representative in India, in a LinkedIn post to mark Indian Prime Minister Narendra Modi’s 73rd birthday, said the company was “aiming for another doubling of employment, FDI (foreign direct investment), and business size in India” by this time next year.
He did not give more details.
Foxconn already has an iPhone factory employing 40,000 people in the state of Tamil Nadu.
In August, the state of Karnataka said the firm will invest US$600 million for two projects to make casing components for iPhones and chip-making equipment.
The company’s Chairman Liu Young-way said in an earnings briefing last month that he sees a lot of potential in India, adding: “several billion dollars in investment is only a beginning”.
Taiwan election: Foxconn’s Terry Gou taps star-powered running mate
Last month, Foxconn’s billionaire founder Terry Gou said he would run for the Taiwanese presidency in next year’s election, as an independent candidate.
He said the ruling and independence-leaning Democratic Progressive Party (DPP) was unable to offer a bright future for the island and left Foxconn’s board following his decision to run.
The firm operates the world’s largest iPhone plant, in the city of Zhengzhou in Henan province.
Foxconn to double workforce, investment in India by ‘this time next year’
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