Our priority is helping clients achieve their investment goals with personalised and proactive advice. As an investor, you must consider investments that provide sufficient returns but you should also factor in risks.
1. You don’t need to be an expert to achieve satisfactory investment returns. But you must recognise your limitations and follow a certain course to work reasonably well. Keep things simple and don’t swing for the fences. When promised quick profits, respond with a quick “no”.
2. Focus on the future productivity of the asset you are considering. If you don’t feel comfortable making a rough estimate of the asset’s future earnings, just forget it and move on.
No one has the ability to evaluate every investment possibility.
3. If you focus on the prospective price change of a contemplated purchase, you are speculating. There is nothing improper about that. I know, however, that I am unable to speculate successfully, and I am sceptical about those who claim sustained success in doing so. Half of all coin-flippers will win their first toss; no one has an expectation of profit if he continues to play the game. The fact that a given asset has appreciated in the recent past is never a reason to buy it.
4. Games are won by players who focus on the playing field, not by those whose eyes are glued to the scoreboard. If you can enjoy Saturdays and Sundays without looking at stock prices, give it a try on weekdays.
5. Forming macro opinions or listening to macro or market predictions of others is a waste of time. Indeed, it is dangerous because it may blur your vision of the facts that are truly important.
6. Tumbling markets can be helpful to the true investor if he has cash available when prices get far out of line with values. A climate of fear is your friend when investing; a euphoric world is your enemy.
7. Ignore the chatter, keep your costs minimal and invest in stocks as you would in a farm [for the long term].
8. Buffett’s advice to the trustee of the estate he will leave to his wife: put 10 per cent of the cash in short-term government bonds and 90 per cent in a very low-cost S & P 500 index fund. (I suggest Vanguard’s). I believe the trust’s long-term results from this policy will be superior to those attained by most investors who employ high-fee managers.
9. The best investment I ever made was Benjamin Graham’s book, The Intelligent Investor (except for my purchase of two marriage licences.)
10. It is vital that we stay well inside our “circle of competence”. Even then we will make mistakes. But they will not be the disasters that occur when a long-rising market induces purchases based on anticipated price behaviour and a desire to be where the action is.