Without specifically addressing a topic or thread many years ago l learned a critically important investment lesson.
For many decades, l have invested in funds and stocks that met an investment theme, philosophy or industry that l believed was worth investing in.
lnvariably, as a contrarian l invested early. I was also convinced l was a long term investor.
I was in unloved sectors like infrastructure uranium, precious metals, tech stocks post Y2K, international shares when Oz shares were the place to be, amongst many of my "errors". I suffered the experience of seeing other more popular speculations go up in price while my holdings languished.
Before the turn of this century, l would lose my berve and chase the winners. But then l stopped and backed my judgement. I finally worked out what the definition of a long term investment was:
to hold onto a position even if it failed to deliver, for 2 years AFTER you want to get out of it. If 5 years of pain was enough, hold for 7. If 7 years was enough, hold for 9.
Naturally, you must test the reason for the investment constant and recognise that circumstances can change, businesses fail. However, if the business remains sound but the sector has underperformed, chances are you are in the right place at the wrong time. IT IS NOT A MISTAKE OF INVESTMENT SECTOR, IT IS A MISTAKE OF INVESTMENT TIMING. STAYING THE COURSE FOR THOSE 2 EXTRA YEARS, MAKES ALL THE DIFFERENCE TO INVESTMENT SUCCESS.
l don't want to name stocks here as that will serve no purpose. However my newly found investment patience has been rewarded with 5, 10, 20 and on occasion 100 baggers. I have also lost 100% of my capital chasing stocks that failed.
Many of my positions became takeover targets indicating competitors also saw the value that l saw, eventually. Isolated investment success led to regular success scattered with mistakes. However, redefining my investment horizon changed my life profoundly.
Right now l believe markets make no sense. I understand the position of active managers and why they have underperformed. I will stay the course avoiding popular memes, popular stocks and popular sectors. They are grossly overbought by complacent investors or passive momentum driven investment funds. Regrettably l feel they will end in widespread capital destruction because the rules of investing rarely change, only the partipants.
lf l have to wait 3 or 4 years more, after a general correction to all equity prices, l will. l have no problem holding dry powder to facilitate opportunity. I can watch others make money and suffer little FOMO.
Every investor needs to question their personal thesis, their approach, their risk tolerance and their pain threshold. In my opinion, only when you know yourself are you ready to be a successful investor.
l will not add investment cliches here, except to comment that most of those attributed to successful investors, are my 10 Commandment of investing.
I wish all investors, the very best of good fortune.
Jack
Expand
(20min delay)