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We were recently contacted by someone who told us he had just started cloning our investment portfolio. Of course, this is a compliment—or at least it should be. But we knew this person had been following our investment work since 2005. Why start now? One possible answer is that after seven years of watching our work, and with the market going up in an almost straight line since March 2009, he was now feeling confident enough to dip a first toe in the stock market water. That could prove to be a mistake. The average investor is notorious for buying into the market at market tops when confidence is high. To make money in the stock market it’s imperative to have capital to invest when people hate the market and are fleeing in droves. In order to have capital for the bottoms you need to sell near the tops, not buy. In March 2009, at a generational stock market low, when we kept back a year of living expenses and pushed every other dime we had into the market, nobody was asking us if it was a good time to invest—people were too busy jumping out of windows or hiding under the bed. Probably the single most important attribute required to be a successful investor is the right temperament. One needs to be able to invest during times of fear and leave the party when people start looking a little tipsy. Someone who only feels brave enough to take a seat during good times is also likely to leave during bad times. Buying high and selling low will never make anyone money. One of the statistics we are most proud of is this: Since 1992 (21 years) we’ve invested in, and closed on, 117 companies. Of these, we made money or got our money back on 109 of them for a no-loss investment ratio of 93%. If you include current open positions, the ratio is currently 90%. This is after two decades of investing. For us to do consistently well as investors, we need around ninety-five people out of a hundred to disagree with us—more if possible.
With large coastlines and the expansive Andes range, Peru has grown to become an international leader in the fishing industry as well as a top producer of materials and precious metals including gold, copper, lead, and zinc.