Bill Nygren: Now Is The Time To Take Advantage Of Increased Volatility & Market Declines

Johnny HopkinsBill NygrenLeave a Comment

In his latest Q2 2022 Market Commentary, Bill Nygren explains why now is the time for investors to take advantage of increased volatility and market declines. Here’s an excerpt from the letter:

Though it is tempting to believe that one should sell stocks following the onset of a bear market, a recession or a period of high inflation, the data suggest otherwise. Stock prices anticipate future events before they occur. After the news is out, it is typically too late to profit. That’s what makes timing the stock market so hard, and that is why we suggest not trying. Instead, we encourage dollar-cost averaging for investing new capital and rebalancing the portfolio after large market moves.

We encourage investors to take advantage of increased volatility and price declines. If you began the year with your assets appropriately divided across cash, bonds and equities, the large declines in bonds and equities have increased the percentage of your portfolio represented by cash. Investing some of that cash now would move you back to your target weightings.

As value investors, most of the Oakmark managers are wired to buy opportunistically, especially after declines. So, last quarter most of us added to our personal investments in the Funds. In the Berkshire Hathaway Annual Report several years ago, Warren Buffett encouraged investors in bear markets to read the Rudyard Kipling poem If: “If you can keep your head when all about you are losing theirs…yours is the Earth and everything that’s in it.” You won’t regret re-reading it.

You can read the entire commentary here:

Bill Nygren Q2 2022 Commentary

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