A stock has no memory of the price you paid for it – 2002

by Ashik Shah on 27 August 2002

Kurm has always made investment decisions with a primary focus on capital preservation. The focus on seeking a “margin of safety” has served us well. Many investors seek to invest in quality businesses, often referring to them as “blue chip.” However an investment in a quality business only becomes a quality investment if made at the right price.  Unfortunately many had forgotten this basic rule over the last four years.

The last few months have seen tremendous volatility. Kurm has managed to weather this storm relatively intact. As Warren Buffett has said: “Volatility is the friend of the long-term investor.” Indeed, while Kurm had a cash position of about 20% of its portfolio at the end of the previous quarter, as volatility presented opportunities, this cash was spent.


While stock markets in general are not necessarily cheap, and may fall further or move sideways, there have been some very good opportunities in individual stocks. Unfortunately, many investors, hurt by investment losses, are waiting on the sidelines until portfolios appreciate to their previous levels. This is a mistake that has led countless generations of investors over numerous cycles to miss out on some very excellent opportunities. After all, a stock has no memory, and thus cannot remember to return to the price you paid for it. This is even more the case if you had overpaid.

Conditions in the insurance market have led to greater profitability in some of our investee companies. Similarly those with cash and strong balance sheets have begun to take advantage of the distress of others. Even in the telecom industry, there are some bargains now!

Kurm Investments, Inc. was originally set-up as a five-year closed investment vehicle. These five years are now nearly completed. You will shortly hear from us regarding plans on how best to carry Kurm forward, and to open the company to new investors.

With our focus on price discipline, managerial competence and integrity, and business quality, Kurm has managed to preserve capital and make it grow at a modest rate.

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The views expressed and comments made on this website are not personal advice based on your circumstances. The purpose of this website is to provide information and analysis to help you make your own informed investment decisions. If you are not confident making your own investment decisions you should contact a firm which is authorised and regulated by the Financial Conduct Authority (such as Ashik Shah & Co. Ltd.) so that a qualified financial adviser, after considering your personal circumstances and investment objectives, can make personal recommendations of investments which are suitable for you. Whether you make your own investment decisions or prefer to follow the recommendations of a financial adviser you should always remember that your capital will be at risk and that investments can go down in value as well as up.

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