"it's hard to find any safe, attractive yields these days, very hard indeed" Richard Russell, July 7 2005

As Stephen Jarislowsky says on page 98 of The Investment Zoo, our "investment approach makes for relatively dull investing". "Stay disciplined and stay on the main highway - don't look all around. You are not seeking an emotional fix...but rather to make safe and sound money in the long term".
"If in the long term stocks yield 5 to 6% after inflation, then buying at an above-average market level will yield less - while the converse is equally true." p.115. Read more of Jarislowsky's thoughts on patience and waiting for value on pages 112, 113, 106, 141, 98, 47, 90, 92, 111, 117, 152 in The Investment Zoo. Mr. Jarislowsky is a billionaire, remember, with 50 years of investing experience.
"we really haven't felt the crunch yet" Steven Jarislowsky, page 33 of The Investment Zoo.
"Today's stock markets are expensive by many of these yardsticks." [P/E and dividend yield] page 92 The Investment Zoo
"At present there are few low-price stocks" Stephen Jarislowsky, The Investment Zoo page 100

"I advise holding an asset that, though almost universally reviled today, will surely be prized tomorrow. It pays a low but fast rising return, and has a sexy four letter-letter ticker: CASH." James Grant Forbes March 14 2005

Have you seen that cartoon featuring two turkey vultures sitting in a tree. One turns to the other and says, "Patience my ass, I'm going to kill something!" :-)

"As surely as the stillness [across almost all capital markets...a general mood of calm and optimism has become pervasive] before a Florida hurricane, the present low reading [of volatility] means that massive turbulence will soon appear." Lisa W. Hess, Forbes March 28 2005

If you pay too high a price for your stock, your returns will be disappointing. P16 The Future for Investors by Jeremy Siegel

"What Charlie and I would like is a little action now. We don't enjoy sitting on $43 billion of cash equivalents that are earning paltry returns. Instead, we yearn to buy more fractional interests similar to those we now own or - better still - more large businesses outright. We will do either, however only when purchases can be made at prices that offer us the prospect of a reasonable return on our investment. Berkshire Hathaway 20045 Letter to Shareholders, March 2005 - Warren Buffett
http://www.berkshirehathaway.com/letters/letters.html at a minimum, read pages 16, 17, 19, and pages 3 and 4 of 2004 Letter

• "Any way you look at it, stocks are expensive." Richard Russell, January 2005
• "I believe the stock market is on VERY THIN ICE." Richard Russell, January 2005
• "The technical underpinnings of the stock market are rapidly deteriorating." Richard Russell, January 2005

• "Portfolio manager Bill Proctor [has been running the $1.1 billion Mackenzie Maxxum Dividend Growth Fund for ten years] is finding it 'very tough' to find stocks he really likes and so he has bumped the cash holding of the funds he manages to the highest level in five years." Angela Barnes, Report on Business, February 4 2005

Barron's March 14 2005 "When you get up to P/Es that we are up to now, with a dividend yield less than 2%, the market has to go flat for a period of time. Eventually, we'll get back to reasonable P/E multiples and the S&P...will have a nice 3% or 4% yield." Ben Fischer - interview by Sandra Ward under the title Value in Dividends

Money Market Funds - I stayed overnight in the big city last weekend (Feb 05) in a home were the occupants were sold mutual funds...both for their taxable and for their RRSP accounts with CIBC Wood Gundy (Three of the RRSP funds were venture type funds, all below par...imagine). As a result, there were some fund statements lying about. Curious about how well one would do if money waiting for investment was kept in a money market fund, I studied the portfolio of the AGF money market fund. With one exception, investments of the fund had a no yield over 2.36% shown. The MER of this fund was 1.64%. I did some mental arithmetic and decided I would not want to keep money in a money market fund even though the balance in brokerage accounts pays less than 1%. As I write this in February 2005, an ING demand deposit pay 2.4% interest with no MER or other fees and you can transfer money electronically. Commercial paper of the Royal Bank is about the same.

PATIENCE - If you are having trouble waiting for better value as we move into Spring 2005, hark back to the first ever wireless communication sent from Glace Bay in 1902 by Guglielmo Marconi: "The patient waiter never loses." I wonder what Marconi was thinking when he sent that message. If it was stocks and he waited until 1904, Marconi would have done well...as long as he sold in 1909 or 1910. Real returns on equities and bonds decreased after 1910 for quite a few years...until the mid-1920s. (Triumph of the Optimists by Dimson et al has real (inflation adjusted - not 'real good' as in American English) good data.
• Or consider this idea to help you wait: earning little, or next to nothing, on a safe investment is better than losing capital on an 'adventure'.
• Or this: we have to be more careful in a bear market. What ever happens, don't do something risky with your money.
• We have a strategy to give us general direction in buying and selling. It works. Have faith. Be patient. Actually we have four strategies, don't we: yield charts - short and long term; position graphs - short and long term; dividend growth data and more recently the Graham number.
• My all time favourite quotation on waiting is from the Battle for Investment Survival by Gerald Loeb - Article 12 in my 1965 edition: "Willingness and the ability to hold funds uninvested while awaiting real opportunities is a key to success in the battle for investment survival. Market valuation of most securities change in a single period of just a few months by an amount equivalent to many years of dividends or interest coupons." p.54 Notice how Loeb mentions not only willingness but the ability to actually hold cash. Here's another waiting quotation from the Warren Buffet's 2002 Berkshire Hathaway letter to shareholders, "occasionally successful investing requires inactivity".
• If you are not holding cash when an excellent investment opportunity arises, how are you going to grab it. Well, I suppose your could borrow. I've yet to borrow, even in the Fall (and fall) of 1987. As Maggie Mahar says in Bull, "In a bear market, this is what is most important: not making mistakes. The goal is to conserve capital. When a long bear market ends, those with cash will find bargains galore."
• "Treasurys [bonds] are no more inherently safe than stocks are inherently value-laden. Safety and value are qualities conferred not by the nature of an asset but by the price at which it is acquired" (James Grant, Forbes Oct 28 2002. Read anything Grant writes.) You can certainly buy BCE, for example, at $29 (February 2005). However, I would argue that the chances of it going lower from $29 are higher than if you bought BCE at $27 a share. Your 'margin of safety' is increased at $27.
• Another idea from p.367 of Bull by, Maggie Mahar: A hypothetical investor had the misfortune to invest $10,000 in the S&P in January of 1973 at the peak of the bear market rally. He or she 'would have to wait 12 year and 11 months to catch up with a neighbour who kept his money in T-bills-if the equity investor reinvested dividends. If he did not, the 'catch up' period would be ___ years..." (Answer at bottom of the page)
• In his January 2005 comment, Bill Gross, Managing Director of PIMCO said: "Cash may not exactly be King in the current 2-3% range, but lets call it a Prince."
• Why does Warren Buffet have something like $32 billion in cash and an equal amount in marketable securities as 2005 begins? Could Mr. Buffet be waiting for better prices?
• Any way you look at it, stocks are expensive." Richard Russell, January 2005
• Under the title "When to Buy, When to Sell", James Grant, in Forbes (November 24 2003) gave "a brief sermon". I wrote it down to help me control my behaviour. "Seek out investments that are absolutely cheap, not just 'cheap to the market'. Hold a cash reserve. Deploy said reserve to buy said bargains."

Or, to flip the coin, these thoughts on not being patient:
• In the long run, if the dividend keeps increasing, does it matter what price you pay? Think about this quite seriously. If the common (I don't buy preferred, but that's another story.) you have your eye on for purchase settles back in price just a bit and this same stock has a good yield and double digit dividend growth, growth which you expect to continue, maybe you should buy it anyway. If it happens to drop in price a bit more, so what. You can handle it. You're older now. You still have your yield and the growing dividend. Eventually, the price will rise again. It has to.
• You could have the conviction that I am full of 'it and that we are obviously into a new bull market. That's fine...the bulls have some good arguments. Nothing is every 100% sure in investing. Either way, bull or bear, it really does not matter. We will hold on to most of our stocks, regardless. Whether the price fluctuates should be of no concern. We can't sell. The yields on our stocks are too good, and with dividend growth, the yields, and eventually the price, just keep going up...bull or bear. That said, however, when prices get high, we could look to cull 100 shares here and there to get 'our original capital back'. I think that way, anyway. Once we have our original capital back, we can't lose. And people say equity investing is risky.

Answer to question: 23 years and a month for the equity investor who bought at the peak in January 1973 to catch up to the neighbour who just bought T-bills at the same time. Wow! A person does not want to buy equities at the peak, eh. Is it worth waiting? I hope this story helps you to wait. One of the greatest fears I hear expressed from people buying their first stock is this: it's going to go down. It could, but don't worry. Read Graham's Intelligent Investor. Graham lost big in the market drop of 1929 - 1932. He learned from it and sought value after that. We are value investors using yield as a metric. And now Graham's percent difference. Buy a good, dividend-paying common at a reasonable price and then relax and let the growing dividends work their magic. After a day or two you should forget about the price. The price is only relevant if you are selling. You're holding...as you would with a bond...for years. Bond prices fluctuate. They're considered safe. I plan to put a chart of the price of real return bond up on this site next year. You will not believe the variation in price and changes in yield.