March 27, 2015

Hot Potato

By Peter Bower

It’s the end of the quarter and professional investors are playing “hot potato.”  Just as soon as any selling erupts, some managers, wanting to preserve their gains, quickly dump shares hoping to get ahead of the rest.  This has nothing to do with investing, but borders on trading (gambling).  Often the same stocks that were sold are repurchased.

This action enhances volatility and explains why it occurs near the end of a quarter.  Managers are measured quarter to quarter and too many feel the need to focus on the short-term rather than make meaningful investments.

This is not what we do.  We invest in companies that we believe will become more valuable by growing their businesses.

Stay steady, my friends.

the Lonely Bull