Alec Hogg: Why low share prices are an investor’s best friend

By Alec Hogg

Am traveling again the next few days. This time it will be to share ways we can all apply processes used by Warren Buffett, the world’s most successful investor. I love these assignments. Interacting with an engaged audience is challenging and going back over old notes and re-opening long forgotten texts in preparation, always brings new learnings.

There was quite a bit of that these last few days. Most relevant: Buffett’s reminder that when buying shares, we’re investing into a finite set of assets. So instead of the way we normally behave, the rational person should celebrate when share prices fall – and whine when they rise.

Lower share prices means you can buy a bigger slice of the company for your rand. As Buffett explained: “In my early days I’d rejoice when shares rose. Then I read The Intelligent Investor (by Benjamin Graham) and immediately the scales fell from my eyes. Low prices became my friend. Picking up that book was one of the luckiest moments of my life.”  As it was mine.

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