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The world as we knew it suddenly changed. What a surprise beyond belief for all of us.
There was no announcement six months ago. There was no new or updated playbook for any of this upheaval.
A harsh pandemic is a sure way of turning lives upside down. Treacherous times are firmly entrenched as the new roadway.
Stock and bond markets march at will in both directions. Investors wonder whether they are closer to a market bottom or to a top. All sorts of fears and worries are sprouting everywhere.
This is a reminder for all to go slow: younger and older, novices and seasoned. Try your utmost to use all the investing common sense you can muster. Sitting on your hands is often a worthy move.
My strategies:
Accordingly, I have selected seven timeless strategies that every investor ought to be familiar with in detail. They form a solid foundation for guiding the family nest egg.
I’ve kept them brief and to the point for the sake of simplicity. Here is my summary of critical strategies:
1). Short term trading is best suited for your “speculative” money. Conversely, long term investing is the best fit for your “serious” money, such as funding retirement. These two portfolios are constructed differently, so don’t mix them.
2). Chasing returns has been far from a consistent winner. Instead, pay attention to acquiring broadly diversified “quality” investments. These portfolios typically fare better during bouts of market turmoil.
3). Set aside the could’ve, should’ve and would’ve schools of hindsight. Make your decisions based on available information and move forward. Looking back in your rear view only creates distractions you can’t do anything about.
4). Becoming attached to your stocks is akin to making emotional decisions. Instead, I recommend pursuing logical moves designed to embrace your best interests. Your investing success should improve.
5). Don’t make investment decision out of fears. Rather, wait until the coast begins to clear. You have absolutely no control over what happens to market fears.
6). Decide whether you seek the return “of” your money, or the return “on” your money. That strategy sheds light on the fit of your desired portfolio. It also keeps you better invested within a more comfortable asset mix.
7). Investing your money all at once is usually not a preferred strategy. Studies show that asset mix delivers the biggest impact on portfolio outcomes. Neither superior stock selection, nor timing of purchases are close seconds.
My premise:
My premise is that investing strategy need not be complicated. I recommend that the main ingredient is always plenty of patience combined with common sense. Focus on logical and sensible approaches that contribute to your discipline.
No amount of investor discipline is excessive. It’s difficult enough to manage one portfolio style. Be extra careful if you oversee both the “speculative” and “serious” portfolios.
It is usually best in such cases to allocate at least 80%, preferably more, of your money to the serious bucket. You don’t want to ruin a well-crafted family portfolio if your speculative component were to self-destruct.
Tread carefully at all times. These abnormal times of mayhem may settle in for long periods. My seven critical, timeless strategies provide a sturdy base to build your best interests of investing.
I’m happy to expand on the strategies presented.
My Call to Action:
1). Confirm that your investing strategies are well-suited to pursuing your best interests.
2). Determine what needs adjustment in your plan when compared to my critical foundation.
Call for assistance.
Above all, stay healthy and safe.
Adrian Mastracci, Discretionary Portfolio Manager, B.E.E., MBA started in the investment and financial advisory profession in 1972. He is currently a portfolio manager with Vancouver-based Lycos Asset Management Inc. He graduated with the Bachelor of Electrical Engineering from General Motors Institute in 1971, then attended the University of British Columbia, graduating with the MBA in 1972.
