Patience — Waiting for Bargains
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Our clients are always asking:
- Why don’t we deploy all cash immediately?
- Why do we hold a larger cash reserve than most other investment advisors?
We believe our clients will do better if they wait for investments to come to us rather than chasing after us. We tend to get better buys if we select from the list of things sellers are motivated to sell rather than start with a notion as to what we want to own. An opportunist buys things because they’re offered at bargain prices. There’s nothing special buying when prices are high.
At Furuya & Co., our motto is “we don’t seek investments, the investments find us.” We don’t go out with a “buy list”; rather, we wait for the phone to ring. If we call the owner and say “You own X and we want to buy it,” the price goes up. But if the owner calls us and says “We’re stuck with X and we are looking to sell,” the price goes down. Rather than initiating transactions, we prefer to react opportunistically.
For other investment advisors paid to manage others’ money, the stakes are high. If they miss too many opportunities and if the returns are too low in good times, investment advisors come under pressure from the clients and eventually lose accounts. A lot depends on how clients are educated by the investment advisors. With all clients, Furuya & Co. has always been explicit about our belief that missing a profitable opportunity is of less significance than investing in a loser. Thus, our clients are prepared for results that put risk control ahead of full participation in gains.