Francois Rochon: A Proven Strategy for Succeeding During Market Downturns

In this interview with The Investor’s Podcast, Francois Rochon discusses the inevitability of significant stock market drops, noting that most stocks, including Berkshire Hathaway, have experienced 50% declines.

He highlights two major market downturns since he began investing 30 years ago: in 2001-2002 and 2008-2009. During the 2008-2009 crisis, despite widespread panic, he saw opportunities due to low valuations and strong company fundamentals.

Rochon emphasizes the importance of staying calm and rational during market declines and being mentally prepared for such events. His approach of focusing on finding the best investment opportunities during downturns led to the success of his portfolio.

Here’s an excerpt from the interview:

Rochon: I think most of the stocks have all over the years at some point, probably the stock dropped 50%. It happens almost also it happened to Berkshire Hathaway I think.

Charlie said that in the years he owned it, it happened three times. So it happens to almost any stocks. So probably in that quote, it was talking about the general stock market. And since I started to invest, 30 years ago, there were two times the market went down 50%.

First one was in 2001, 2002, close to 50 percent. In 2008 and 9, I think from top tick to bottom tick, it went down 56%. So 2008 and 9 was probably the biggest bear market since 1934. And it was a tough period.

At some point we could be worried about what would happen to the economy, but I was finding a lot of opportunities and the companies we owned, I was confident they would make it through. And they had a good balance sheet.

They were still profitable and the valuation was as low as I ever seen, at least in the years I started to invest. I remember I was interviewed in a newspaper in I think it was February, 2009.

And I said, wow, in French it rhymes. I called it the [unintelligible], but in English it doesn’t rhyme. So the opportunity of a generation. I said that’s the best opportunity we have in this generation to invest in the stock market just because valuations are so low.

But most of the people I talked to they didn’t share my enthusiasm. I remember I even went on TV and I said that it was a great time to invest. And I was very excited. And the person that was interviewing me, I looked like me, like I was a Martian, everyone was panicking and worried.

And I was there saying, almost with a smile, this is a great time to invest. And I talked to some other investors, other managers I knew, and some of them shared my enthusiasm, but many of them were worried and they would say all the same thing, yes, stocks are cheap, but they will be cheaper soon.

It will continue to fall, and but if you think of the idea of Charlie, that you have to stay calm and rational, and accept there’ll be big drops of the stock market from time to time when it happens, you’re almost ready for it, because you know it’s gonna happen sometime.

And I was ready for it. And I didn’t know when it would happen, but I thought in my lifetime, though, it’s going to happen a few times. So I better be prepared mentally. So when it happened, I just said let’s focus on finding the best opportunity, the best stocks we can purchase. And yeah, it did well. Our portfolio did well from then.

You can watch the entire interview here: