During the months preceding the market low in March 2009, there was plenty of low-hanging fruit to pick – financially sound companies that were trading at bargain prices.

After I researched a company and was about to recommend it in one of our portfolios, I checked and double-checked my numbers because I thought I had made a mistake. Mr. Market was offering these companies for a fraction of their worth … which I found hard to believe.

I sent an email to a colleague and asked whether he’d go over my work to see if I had made a mistake. His response: “Nope, you’re right. That’s what stock prices sell for at market bottoms.”

This was especially true after the summer of 2008. Companies that had rock solid balance sheets, little to no debt, and were good/great businesses … were there for the taking.

Two of those stocks are still in our portfolios—and each of them is up more than 300%! We sold the other stocks when they became fully valued and replaced them with stocks that were trading at more attractive valuations.

Since the March 9, 2009, market low, the S&P 500 index has soared to new highs, more than doubling . Needless to say, there isn’t as much low-hanging fruit to pick at these price levels.

Our approach is a two-pronged one: we want to buy only financially sound companies when they are trading at attractive valuations. During bull markets that isn’t always so easy.

Ted Williams’ Secret to Investing Success?

Boston Red Sox outfielder Ted Williams was the last baseball player to have a batting average of .400. In 1941, Williams batted .406, and since then, only four players have hit as high as .390. Many baseball historians say that Williams’s record will never be broken.

Investors can learn a lot about investing from him.

Williams had an analytical mind and was a disciplined hitter. He estimated his batting average in each area of the strike zone and would swing only when the ball was in the area where he had the highest probability of getting a hit.

Print Friendly, PDF & Email