When to buy?

Here we are. The storm had been threatening for a while, but this time the big wash has begun. It's Marignan, Austerlitz and Baghdad all rolled into one. Some had foreseen it, others hadn't. It doesn't matter. We're all in it whether we like it or not, shareholders, managers, employees, men, women... Some don't know it yet, but they're in the mess like the others.

The (un)lucky ones like me who have been in the market since 2000 know what this means. This is just the third bear market we've had in a little over ten years. For the young guns who have just started out, it's certainly bad. For the older ones, it's paradoxical, but we're starting to take it philosophically. In the end, we've already been through this, everyone thought the end of the world was here. No one would drink Coca-Cola, change their children's diapers with Pampers, shave with Gillette, brush their teeth with Colgate or wash their hair with Palmolive. Humanity was going to change: bearded men with decayed teeth, children with unsanitary behinds and women with greasy hair. This is the new post-carbon society.

It worked the first time, a little less the second, but this time, we won't do it again. It's like with their bird and swine flus. Oh sorry, we shouldn't say swine, but H1N1. That way, we won't have to rack our brains for the rest of the series. Anyway.

Okay, we're going to have to tighten our belts. So what? The market has survived two world wars, three oil shocks, a technical crash, several technology bubbles and several financial crises.

We have to look on the positive side: since Thursday evening the ratio of total market capitalization to US GDP has fallen to 86.4, which is comfortably in the zone of a correctly valued market. Not undervalued, surprisingly. Let's remember that we started from such a high point in 2000 that it took just over 10 years to get back to normal (as W. Buffet predicted), with just two interesting entry points in 2003 and 2009. This means that it can, if not will, fall further. But it also means that from now on, we can expect performances from stocks that better correspond to their status (provided that we invest for the long term, as is proper for this type of asset).

Well now, here is the eternal debate... When to buy? Some fundamentalists say that it is better to buy a little too early than too late. Others think on the contrary that it is better to buy a little too late, like most technical analysts. The important thing, it seems to me, is to feel comfortable with your approach, and above all, and this is particularly trivial, to buy cheap. Rather than focusing on the upward or downward trend, it is better to stop at the price at a given moment and put it in relation to the value of the company (its profits, its book value, its capacity for innovation, its competitive position, its management, its growth prospects, the dividends paid, its profitability, etc.).

It takes courage, that's true. And you have to have strong nerves to withstand other future declines. Having a little cash set aside can also help you take advantage of these later corrections. Above all, you have to have a long-term vision and not let yourself be disturbed by the sirens of the media.