I can't decide whether I'm jinxed, or whether I'm just proof that Murphy's Law is real and, well, Murphy is just a no-good so-and-so.
Whatever the reason, if you owned certain US stocks before last night, you're welcome.
See, I'd been planning to buy some US companies for a while now. But, between getting the money into my US brokerage account (in US dollars), and the trading rules here at The Motley Fool (yes, okay, and my never quite getting around to it), I just hadn't done it.
So, last night, after dinner, I sat down and finalised my list of the companies I wanted to buy with the cash I had in the account.
Then, this morning, I woke up, and…
And the shares were up.
By quite a bit.
Bloody Murphy's Law.
So, I didn't buy them, right?
Wrong.
I bought them anyway.
Now, there'll be more than a few of you shaking your head right now.
Who buys when shares are up, for goodness sake?
Why not wait for them to drop?
Sentiments I understand.
But sentiments you need to dispense with, if you're going to be a long term investor.
See, here's the thing: buying — or not — based on what happened yesterday, today, or tomorrow, is not a particularly great way to invest.
You reckon the person who bought Woolies shares at $3, kicking herself for missing them at $2.90, is still kicking herself today, when the share price is closer to $40?
I mean, sure, given our druthers, we'd all choose to jump in the time machine and travel back to the Woolies IPO and buy shares then, but we don't have that luxury.
Frankly, I don't know if my hypothetical mate would have had the chance to buy Woolies again at $2.90.
Maybe she would have.
Or maybe not.
And what would have been the bigger sin?
Missing out on $0.10, or missing out altogether on buying, because your target price was never reached?
Still, that's just a hypothetical, right?
Would never happen, right?
Not so fast.
You know my Woolies example? There's a US analog.
Some bloke called Buffett.
And some company called Wal-Mart.
You might have heard of it. And him.
Buffett estimated that his company, Berkshire Hathaway (I own shares, for the record), lost out on US$10 billion in profits when he stopped buying after the share price rose through a predetermined price.
He stopped buying because he'd set a mental limit that he wouldn't cross.
In hindsight, he cites it as one of his biggest mistakes.
Which isn't to say he should've or could've paid just any old price for the shares.
Or that you and I should, either.
But if you're only going to pay, say, $2.90 rather than $3 per share for a company, do you really reckon your valuation skills are so good that you can correctly estimate the worth of a company to within 3%?
Because I have to tell you, mine aren't.
And here's the other thing — I reckon, on balance, I'm much better off finding a company with a great future and paying an approximately attractive price, then obsessing over the last 5 or 10 cents on a mediocre business.
Because, maybe the share price comes back down.
But maybe it doesn't.
And if we're right about the long term potential, that bit is going to matter a whole lot more.
Want to spin out a little more on the 'coulda, shoulda, woulda' stuff?
One of the companies I bought last night was up about 5% on the day before.
Ouch.
Then again, it's still down 25% on its 2021 highs.
Beauty!
Oh, but it's currently selling for more than double what it was selling for a year ago.
Bugger.
And around and around we go.
Just like Buffett's $10 billion, or my mate's 10 cents, it's easy to get caught up in the emotion of trying to pay the best price.
But don't miss the forest for the trees. Buying the right business, at approximately the right price, is far, far better than obsessing over the last few cents per share.
Maybe the shares I bought this morning fall overnight.
Maybe they go up.
Maybe they close, unchanged.
I really don't care.
If I've bought quality, at a decent price, this'll be the last time I even remember what happened yesterday.
The prize is through the windscreen, not the rear vision mirror.
(Oh, and if you're wondering what I bought, I could tell you, but I'd have to kill you. Well, I'd be in some serious trouble at work, at the very least. The Motley Fool's trading rules prohibit me from talking about a company, by name, for two full market days before and after making a trade. And I enjoy my job, so I'd like to keep it!)
Fool on!
