Investment philosophy is based on two fundamental principles
• Buying when the future is uncertain – A stock is available cheap only when the general market does not expect it to do well in the short-term. Therefore, if an investor wishes to beat the market he/she should purchase the stock before the market does. If one is confident about the quality of the company and its long-term earnings power, then its short-term price movement should be of less importance.
• Seeking to avoid permanent loss – For an investor the real risk in the stock market is the risk of permanent loss. All shares are subject to price fluctuations; therefore temporary losses are unavoidable. Permanent loss occurs when an investment is made in a substandard business, in a company where the management is questionable or at a price that is exorbitantly high. As the legendary Seth Klarman says: The avoidance of loss is the surest way to ensure a profitable outcome