Why is it that, as investors, we never seem to be satisfied? That enough is never enough? Our attitude seems to be, why settle for less, even when less is more than sufficient.
As an Investment Advisor, I see it all the time, not just in my business or when talking with other Advisors, but in article after article, blog post after blog post, book after book. Investors the
world over want more. So the question is, what is an acceptable return? Here’s an example of what I’m talking about:
Back in 2001 a client of mine bought a dividend paying Canadian Stock. The stock price grew steadily over the years, as did the dividends. In the last two years, however, the stock lost over 50% of its value and my client decided to sell it.
In hindsight, I wish I’d said “sell” two years earlier. But investing isn’t perfect and you can’t know everything. But the main point I want to make is this:
Even though the stock lost more than half it’s value my client’s return, including dividends, was still more than 11% — over a period when the TSX index made 4%, the S&P made 2.7% and the MSCI Global Index made 2.1%.
So what do you think? Is an annual return of 11% in a 2% world acceptable?
Alan Friedman is an Investment Advisor with CIBC Wood Gundy in Toronto. The views of Alan Friedman do not necessarily reflect those of CIBC World Markets Inc. CIBC Wood Gundy is a division of CIBC World Markets Inc., a subsidiary of CIBC and a Member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada. If you are currently a CIBC Wood Gundy client, please contact your Investment Advisor.