Happy Saturday friends,
This week, I read the book Dear Shareholder: The Best Executive Letters from Warren Buffett, Prem Watsa & Other Great CEOs by Lawrence Cunningham (of The Essays of Warren Buffett fame).
It was a highly enjoyable read, even if it lacked a ton of great direct investing insight. However, if you run a company, you will likely find it to be an incredibly valuable book.
That said, there were a few insightful investing sections though, one of which comes from Tom Gayner, CEO of Markel Group. In Markel's 2006 Letter to Shareholders, Gayner shared the following thought on the impossibility (and unnecessary nature) of forecasting the future of the stock market (emphasis is mine):
"In 1986, it would have been impossible to forecast the real estate troubles of the early 1990s and the collapse of the savings and loan system in our country. It would have been impossible to foresee the rise of the internet, the weakening and strengthening and weakening again of the dollar. It would have been impossible to foresee the swings in energy prices. It would have been impossible to foresee the nature of the geopolitical struggles we've seen in the Middle East. It would have been impossible to foresee the terrorist attacks of September 11, 2001. All of these things affected the world's economies temporarily, but no one could have forecast them, or their effects, with any consistency.
At Markel, we didn't forecast them, and we didn't need to, in order to create excellent long-term returns for our shareholders. We simply took the capital we had and used it to the best of our abilities in the insurance and investment arenas following sound and proven business disciplines."
I would argue that the most important words here for Main Street investors are that "we didn't need to."
Just because forecasting is a prevalent (and unfortunate) tradition on Wall Street does not mean it's valuable.
Simply buying the great companies of the world and never selling them would result in much better outcomes for most investors. Thankfully, this has never been easier or cheaper than it is today.
That's all for this week. See you again next Saturday!
Invest Rationally,
Ashby
P.S. You won't want to miss last week's episode of the Rational Investor Podcast, as we covered Warren Buffett's thoughts on bonds. You can listen to that episode in your podcast player of choice by clicking here.