Solid convictions versus "snake oil"

As we reflect on the lessons of 2009, some of which we have discussed recently, one thing that strikes us as very important to pass along is the fact that the events of 2009 validated strong convictions that we have held and preached for almost two decades.

Over the years, we realize that we may sound like "a broken record" (how's that for an expression that has been bypassed by the rapid advance of technology!) because we always come back to the time-tested truth that investors should focus on ownership of great businesses and not get caught up in the widely-held belief that "investing" is about anticipating the next market move one way or another.

We even alluded back in October 2008 to the fact that our message often seems "boring" in times of easy sailing, but that it is times of great turmoil that prove its worth.

It was those years and years of honing those convictions, however, that stood us in good stead during the global financial crisis, and enabled us to write "Don't get off the train" in early March, 2009 and to know exactly what to say to investors who were tempted to jump out of their investment positions at the very darkest hour of the storm.

We believe that a solid understanding of these core convictions can help investors to avoid the dangerous but alluring call of the various schemes and systems of market-based (as opposed to business-based) anticipation, which we have referred to previously as modern-day forms of "snake oil."

Thus, our timely warning not to "get off the train" and our later March 13 post saying that if mark-to-market accounting rules were changed "we believe the economy -- and the markets -- can recover much faster than most investors realize" -- which is exactly what happened -- were not examples of our being able to predict the markets, but just the opposite. They were evidence of the value of the right set of long-held convictions which show their true worth when things are most chaotic.

Now that the dust has cleared somewhat, we believe investors should reflect carefully on this valuable lesson.

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