Francois Rochon: Navigating Market Crashes

Francois Rochon, CIO of Giverny Capital, recently shared his approach to navigating market crashes on the Meb Faber Podcast. His perspective emphasizes acceptance, preparation, and strategic action rather than panic or futile attempts at market timing.

Here are the key takeaways:

• Francois stresses that bear markets are inevitable and unpredictable; trying to forecast them is pointless, so investors should simply accept their occurrence.

• He uses Charlie Munger’s analogy: setting low expectations – knowing your portfolio may be halved at some point – helps investors remain calm and philosophical during downturns.

• Bear markets typically occur every seven to eight years, so readiness is more important than avoidance.

• Even when fully invested, investors can profit from crashes by reallocating funds from less undervalued stocks to those that have become significantly more undervalued, thereby upgrading their portfolio’s quality.

• Francois’s approach is rooted in patience and mental preparedness: don’t fear market crashes but use them as opportunities to acquire great businesses at bargain prices.

In addition to this video (embedded below), Francois also recently visited The Investor’s Podcast which is also worth a watch (here)