Global Disruption Only Brings Good Buying Opportunities

Several news are coming out that there is an ongoing military ‘movements’ in the South China Sea.

Summary:

U.S. sent a Navy destroyer (guided-missile destroyer) near one of China’s man-made islands in the South China Sea.

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Google Image

The nine-dash line

According to Bloomberg, “foreign Ministry spokesman Lu Kang said that the USS Lassen had “illegally” entered Chinese waters and that “relevant Chinese departments monitored, shadowed and warned the U.S. ship.” China has “indisputable” sovereignty over the Spratly Islands and surrounding waters, Lu said.”

USS Lassen (DDG-82), Wikipedia picture

USS Lassen (DDG-82), Wikipedia picture

In addition, Lu had said, “the Chinese side expressed its strong discontent and firm opposition.”

Well, it’s already hard to determine the intrinsic (fair) value of a company, much more determine possible outcomes of this initial military ‘event’ that had just happened.

As a value investor, I would rather reread what Sir John Templeton had said in page 17 (his last RULE) of his 1993 article 16 Rules for Investment Success about such related events:

“And now the last principle. Do not be fearful or negative too often. For 100 years optimists have carried the day in U.S. stocks. Even in the dark ’70s, many professional money managers—and many individual investors too—made money in stocks, especially those of smaller companies.

There will, of course, be corrections, perhaps even crashes. But, over time, our studies indicate stocks do go up…and up…and up. With the fall of communism and the sharply reduced threat of nuclear war, it appears that the U.S. and some form of an economically united Europe may be about to enter the most glorious period in their history.

As national economies become more integrated and interdependent, as communication becomes easier and cheaper, business is likely to boom. Trade and travel will grow. Wealth will increase. And stock prices should rise accordingly.”

We may not feel any trepidation in the markets yet with this initial knee-jerk Chinese reaction. But, it is better to be prepared.

Video

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link to 3-minute Bloomberg video (http://www.bloomberg.com/news/articles/2015-10-26/u-s-said-to-allow-navy-patrol-by-disputed-chinese-made-islands)

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Link to CNN Youtube video (https://www.youtube.com/watch?v=_Oy0Fo2jx30); published in May, 2015.

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Reuters video (http://www.reuters.com/article/2015/10/27/us-southchinasea-usa-idUSKCN0SK2AC20151027)

Nevertheless, here is S&P500’s and DJIA’s performance during those ‘dark times’:

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Or.. Maybe there won’t be such ‘happening’ at all.

Happy investing.

Mark Y.

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