Missed the market rally? Learn from the Warren Buffett playbook
Retail buying on 4 June pushes F25 buys to levels seen in whole of F24 Let’s come to the second reason. Buffett bought into Apple when it was trading at about 10 times earnings (P/E of 10). Unbelievable, right? Today, of course, Apple trades at a P/E of about 33x, based on past earnings.
At the risk of oversimplifying, Buffett bought into a high-quality company for cheap. He had once again waited for the right opportunity to make a big bet. And in case you are wondering, it’s estimated that in these last eight years, his investment is up 5x to 6x (estimates vary).
Yes, wow! So, the person who we all admire missed one of the biggest wealth-generating opportunities of all times. Until he did not. He figured out a way to get in.
Now, in this story, replace Buffett with yourself, and tech stocks, with the Indian stock market. And 2016 (when Buffett bought into Apple) with 2024. You see where I am going with this.
The fact that the Indian stock markets have run up does not mean you have missed the opportunity forever. It just means you have to wait a while longer to get in. Also read | Retail investors and the fixation with equity MFs Now, there are two ways to deal with this.
What I see people around me doing is the easy solution: buy into the high-momentum stocks hoping the momentum continues. This will probably work for you till it doesn’t (it almost never does). Others are more adventurous.
They have jumped into options trading and the like. There’s enough history out there to show these things do not work out for most people. The other solution, which we will call the Buffett solution is this: don’t regret that you missed the rally i.e.
no FOMO at all. Instead, keep building cash reserves. And at the same time keep
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