I do not normally follow Jim Cramer, however I thought this video was very important for value investors to view. The video is a segment on CNBC taken on March 6, 2009. That day the S&P 500 hit a low not seen since 1996. The S&P declined to under 660, the Dow was at 6400.
Jim O’Shaughnessy: Revisting The Ideas Buried In The Graveyard
ValueWalk's Raul Panganiban interviews Jim O’Shaughnessy, Chairman, Co-chief Investment Officer, and Portfolio Manager at O'Shaughnessy Asset Management. In this part, Jim discusses revisting the ideas that got buried in the research graveyard and his favorite books. Q1 2020 hedge fund letters, conferences and more Oh, man. Yeah, for the the research graveyard, do you ever Read More
I think anyone who invests in the market will never forget that day. Many people saw their life savings cut in half, if not more. The market seemed like it would never stop dropping. Job losses, industrial production and other economic metrics were horrendous. Many pundits were saying the market would decline another 50%. On the economic front some economists were predicting a second great depression. Thankfully, that was the low point of the recession, and hopefully it will remain the low point.
I think this video is important since it shows value investors the folly of market timing. No one called March 6, 2009 as the bottom of the market. The only people who made money were people who stuck to their gut and kept buying stocks as the market declined regardless of the economic outlook ahead. I remember who foolish I felt buying more and more as the market went lower and lower. However, my discipline and patience paid off in the long run.
Watch the segment below:
Cramer predicts the Dow hitting as low as 5320(that was optimistic at the time). He predicts this as the worst case scenario. It is interesting many of the stocks he mentions and the prices they are at now: Citigroup, American Express, Disney, General Motors, Merck, Proctor Gamble, Coke, Verizon, At&t, Alcoa, Boeing, Disney, DuPont, Exxon, IBM. JPM.
It is also interesting to look at the ticker and see what prices the stocks are trading at now. Again, this video shows how important it is to buy when stocks are cheap and to ignore market and economic forecasts. This is one of the most important lessons a value investor much always keep in mind.