Sir John Templeton, creator of the Templeton Growth Ltd. fund, was a pioneer in both investments and philanthropy. In the 1950s, he provided advice on how to invest worldwide when Americans rarely considered foreign investments. Much of what he espoused more than a half-century ago remains just as valid today.
Here are some of his rules which may help investors today:
The only way to avoid mistakes is to not invest. This may end up being the biggest mistake of all. So forgive yourself for your errors. Don't become discouraged and certainly don't try to recoup your losses by taking bigger risks. Instead, turn each mistake into a learning experience. Determine exactly what went wrong and how you might avoid the same mistake in the future.
The investor who says, "This time it's different," when in fact it's virtually a repeat of an earlier situation, has uttered the four most costly words in the history of investing. Successful people learn from their mistakes and the mistakes of others.
This means the return on invested dollars after taxes and after inflation. This may be the only rational objective for most long-term investors. Any investment strategy that fails to recognize the insidious effect of taxes and inflation fails to recognize the true nature of the investment environment and, thus, is severely handicapped.
One of the biggest mistakes people make is putting too much money into fixed-income vehicles which don't keep up with inflation.
The stock market is not a casino. It takes research and knowledge. Buy low. Of course, you say, that's obvious. Well, it may be, but that isn't the way the market works. When prices are high, a lot of investors are buying a lot of stocks. Prices are low when demand is low. Investors have pulled back, and people are discouraged and pessimistic.
Heed the words of the great pioneer of stock analysis, Benjamin Graham: "Buy when most people, including experts, are pessimistic, and sell when they are actively optimistic." Bernard Baruch, adviser to presidents, was even more succinct: "Never follow the crowd." So simple in concept – so difficult in execution.
A wise investor knows the stock market is really a market of stocks. While individual stocks may be pulled along momentarily by a strong market, ultimately, it is the individual stocks that determine the market, not vice-versa. The stock market and the economy do not always march in lock step. Bear markets do not always coincide with recessions, and an overall decline in corporate earnings does not always cause a simultaneous decline in stock prices.
Expect and react to a change. No bull market is permanent. No bear market is permanent. And, there are no stocks you can buy and forget. The pace of change is too great. Sometimes to get ahead you have to look back.
- Grant White, CIM, CFP
Grant White is a Portfolio Manager/Investment Advisor at Endeavour Wealth Management with Industrial Alliance Securities Inc, an award-winning office as recognized by the Carson Group. Together with his partners he provides comprehensive wealth management planning for business owners, professionals and individual families.
This information has been prepared by Grant White who is a Portfolio Manager for Industrial Alliance Securities Inc. (iA Securities) and does not necessarily reflect the opinion of iA Securities. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Portfolio Manager can open accounts only in the provinces in which they are registered.
Thinking about death isn’t fun, but not planning for it can have consequences. Unfortunately, most Canadians don’t expect to die without a legal will.
September 26, 2022
To help you make sense of the recent interest rate hikes by the Bank of Canada, our blog this week is focused on what impact these monetary policies..
September 19, 2022
In July we had the pleasure to sit down and host a panel with several local business owners and entrepreneurs, their stories were not just powerfu...
September 13, 2022
Download your free guide to financial freedom.
Download our free guide to learn how best to protect yourself, your family, and your retirement.
Download your free guide to learn how you can protect your retirement savings with a Personal Pension Plan.
Download your free guide to help ensure you don’t run out of money.
Download your free guide to learn how to ensure your portfolio and plan stay on track.