François Rochon: The King of All Lessons For Investors

Johnny HopkinsFrancois RochonLeave a Comment

In his latest 2023 Annual Letter, François Rochon explains why trying to time the market is a futile exercise for investors. While some may be tempted to avoid the market due to economic fears, he emphasizes the importance of long-term ownership in quality companies, regardless of short-term fluctuations. Here’s an excerpt from the letter:

I have learned many lessons over the years. I had already dealt with this during the 20th anniversary of the portfolio and I do not want to repeat myself (I invite you to reread the 2013 letter).

The lesson that remains king of all lessons is this: the best stock selection philosophy is futile if you try to predict the stock market. The worst mistake made by stock market investors is trying to predict the direction of the market over the short term (a few years or less).

Our mission at Giverny Capital is to be long-term owners of around twenty above-average companies and to remain unfazed by the vicissitudes of the economy, geopolitics and financial markets.

Of course, there will always be investors who want to try to predict the stock market despite all the studies which demonstrate the futility of such a quest. The intentions of these investors are laudable (optimizing the return on their capital) but they remain illusory.

This translates into phrases like “I find the market expensive, and I think we should get out of the market temporarily” or the famous and  recurring phrase: “I don’t think it’s a good time to invest in the stock market.”

The reasons provided change from one year to the next, but it always comes down to the same mistake: depriving oneself of owning quality companies out of fear of macro-economic and/or political events (which are undoubtedly temporary in nature).

You can read the entire letter here:

Giverny Capital Annual Letter 2023

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