Cisco, Apple and Oracle: Strong Cash Positions Indicate Safe Long-Term Returns


During this horrible crisis, I feel very fortunate that “social distancing” is very practical and easy for my family and me. We are blessed to live in the country on a 20-acre estate with a private lake and a backyard that is steaming with wildlife. In this time of isolation, we can sit on our screened porch and immerse ourselves in nature as we are entertained by wildlife of all kinds.

During this time a year we are seeing and being entertained by mama Wood Ducks and Mallards raising their newborn babies, and squirrels frolicking in the trees. We also see otters and cranes of all sorts fishing in the lake. And occasionally, we will spot deer, raccoons, possums, the occasional coyote and if we are really lucky, we might spot a bobcat drinking from the banks of our lake. Thankfully, this is helping keep all of us sane as we dutifully follow the federal and our state guidelines by isolating ourselves in order to keep our family and our neighbors safe.

In addition to the wildlife described above, my family and I also enjoy sharing our home with 4 dogs and 2 cats. The reason I am sharing all this is because my current investment strategy was inspired by watching my black cat “Blackjack” hunting squirrels in our backyard. Jack’s squirrel hunting strategy got me to thinking that his hunting tactics are the same that I should use as I attempt to hunt for good stocks during this horrible crisis.

What inspired me most was the incredible amount of patience that Jack displayed. He simply lay motionless as squirrels frolicked around the base of our trees picking up acorns. He was in no hurry because he was smart enough to wait patiently until his prey was most vulnerable and ideally susceptible to being pounced upon. In other words, he never rushed things because his instincts and experience taught him that his best chance for success was to strike when the opportunity best presented itself. Fortunately for the squirrels, the only thing that saved them was my sweet wife who would chase the squirrels away thus spoiling Jack’s efforts.

Nevertheless, as I sat there watching Jack stalking his prey, it occurred to me that his strategies would appropriately apply to my stock picking needs during this time of crisis. Therefore, if I were to describe my current investing posture, I would say that it is like the hunting behavior of my cat Jack. Just as he saw squirrels everywhere, I see attractively valued opportunities everywhere in this aberrant market. However, Jack taught me that I don’t need to be in any big hurry because just like the abundance of squirrels in my backyard, the opportunities to invest in great companies at great value is everywhere.

On the other hand, just like Jack’s efforts were spoiled by my wife, I must be careful that the market doesn’t chase all these bargains away. In other words, I must be aware of the risk that the market could possibly be forward-looking and begin rising before the virus is contained or before the economy begins to improve. Nevertheless, if a few of them do happen to get away, it is very likely that there will still be plenty available.