I read a very interesting blog post the other day. In it, there is a Warren Buffett quote that makes so much sense: “The most important quality to do well is temperament which would permit the control of fear and greed which have ruined many. Anyone who has become rich twice is dumb. Why would you risk what you need and have for what you don’t need?”
Both the quote, and the blog post where I read it, made me think about the recent election in the U.S. and all the commotion it caused. The worrying, wondering and speculating over who would win and what the potential Read More »
In the investing world, the topic of diversification often arises. As money managers, we advise clients on their stocks, bonds, mutual funds, hedge funds and real estate funds, among others. The intellectual stimulation of this job is hard to beat. We do believe portfolios should be diversified across asset classes. But, when it comes to owning simple common stocks, concentration is the way to go.
My friend David Kaufman recently published an excellent article in the Financial Post on the merits of owning a concentrated portfolio of stocks. David writes for all readers, regardless of their familiarity with high-tone investment language, and his column is worth reading. You can find it here.
David makes a simple point. With the proliferation of exchange traded funds and, I will add, the number of smart people that have flooded into the investment business, it becomes difficult to outperform the stock market.
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As Clint Eastwood said in Magnum Force, “A man’s got to know his limitations”. Warren Buffett is perhaps the wealthiest and most famous investor of all time. Therefore many have tried to emulate him – including professional money managers – without much success. The fact is, very few could ever duplicate the process and the success he and his partner, Charlie Munger, have achieved at Berkshire Hathaway.
First, Buffett has over 75 years of investing experience, having bought his first stock at age 11. As well, except for a few hands of bridge with Bill Gates, he spends all of his time evaluating investments. His wealth and ownership of Read More »
Managing emotions is an important part of investing. An experienced Investment Advisor can help with that. We work with clients to prepare a financial plan and help them stick with it over the long term, regardless of market fluctuations.
In recent years, a whole new field of study has evolved called “Behavioural Investing”. It explains why people react the way they do and points out Read More »
For those readers who know me well, this is a familiar topic. I am a major advocate of encouraging young people to start investing early. The principal reason being that if you start early enough, the prospect of becoming rich is almost guaranteed.
A little known fact is that over the course of the 20th century, every $1,000 invested in the S&P 500 stock market index, with dividends reinvested, would have become about $19 million. What is even more impressive is that over most of that time, no real work was required by the investor. You could have beenRead More »
My mentor in this business often tells me that to be successful, knowing some financial history is essential. Many people would argue that it’s always good to know more about the world we live in but, in a more practical sense, being well informed on history is very helpful to the investment process.
Market Fluctuation — Not As Uncommon as You May Think …
We have all been reminded, recently, that the stock market is a volatile beast. This is a fact investors often forget, especially in the good times. Some of you may be surprised to learnRead More »
If you said “luck,” you’re wrong. If you’re thinking whatever it is, you haven’t got it, you’re also wrong. Because they’re traits that are available to each and every one of us:
Above all else, successful investors are savvy shoppers. They also have a lot of patience.
That’s right. They look for bargains. They know value when they see it. And until they see it, they wait. They also understand and appreciate the power of compound interest — and Read More »
Contrary to what many conventional investors believe, holding cash in your portfolio is key. So says Warren Buffett and he should know. It certainly works for him.
Actually, he doesn’t just say it’s a good idea. In his case, actions speak much louder than words. He’s sitting on more than $40 billion U.S. of cash at his Berkshire Hathaway holdingRead More »
Making mistakes is nothing new. We make them in life and we make them when we invest. It happens to the best of us. Even Warren Buffett. In fact, there’s a book about them, “Even Buffett Isn’t Perfect”.
Right on my website there’s a video where I talk about a mistake I made. I wasn’t an Advisor back then. I was an investor, just starting out. It was my first investment. I was Read More »
Investors everywhere are grappling with the same issue right now: Should we still be investing? They’re gun shy. They’ve lost confidence. But allowing portfolios to stagnate can be risky.
The best analogy I can come up with is to compare investing to exercising. Inactivity can Read More »