In a year which few are likely to forget, the market continued to provide salient lessons.

Given the extra risk in the system, the recession, the likely diminution in profits, forecast increases in unemployment and general unrest, one would have predicted a dire share-market, and perhaps justifiably so.

However, the great investors in history often point out the folly of making market predictions. Quite often the market will do the opposite of what it ‘should do’. In fact, John Templeton adroitly summarised this phenomenon in his observation that, “Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria.” At the end of this newsletter, we provide a list of some of John Templeton’s famous maxims.

It can require a great deal of fortitude to maintain holdings in wonderful businesses when the rest of the world is panicking, and the media are cheering on the panic.

We try to do our little bit to help by reiterating in many of our newsletters the essence of looking at a share-market investment through the eyes of a business owner and avoid speculating on short-term market movements. This approach is not only logical but helps investors who might panic to hold on to their investments.

Of course, from time-to-time the market does have large falls. These times should be treated as times of opportunity.

We wish all out loyal readers and clients are very enjoyable summer break and look forward to helping you again in 2021.

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