Rule #1 Finance Blog

With Investor Phil Town

FACTORING IN THE BIRD FLU: THE EFFECT OF GLOBAL EVENTS ON YOUR INVESTING DECISIONS

Here’s a quick Q&A from Sandra.

Hi Phil,

Please bear with me, I’m still trying to catch on.

Let’s say Sanderson Farms met Rule # 1.  Do you factor in global events, like the bird flu? How does this effect your decision?

Thanks,
Sandra

Good question, and one we haven’t addressed yet. Here goes:

Hi Sandra,

Should we factor in the bird flu?  Well, let’s try.  The bad thing
about the bird flu is that it might kill all of Sanderson’s birds.  The
good thing about it is that it might kill all of someone else’s birds, in
which case the price of Sanderson’s birds will skyrocket and our biz
will make a fortune that year. 

Or nothing will happen. 

In other
words, I ain’t smart enough to figure this out, so no, I don’t factor
it in.  What I do is keep track of those arrows and understand that if
the Big Guys think bird flu is going to mess with their investments,
they will start to sell — in which case I will get red arrows and I’m
outta there.  And so are you!

Our job is to look at the long run, make sure we understand the
business, and invest when we find a wonderful long term, predictable (all
of that is included in the word
"wonderful" but I thought I’d throw it
in for good measure) business when it is available at an attractive
price.  Bird flu will come and go, and we’ll get in and get out.  But
we’re on this for the long run.

Now go play with your chickens.

Phil