Speculator or Investor?

Most of the people who come to us for advice consider themselves investors, not speculators. The difference is of course open to interpretation and worth exploring. The dictionary defines speculation as “the forming of a theory or conjecture without firm evidence”. Sound familiar? This is indeed how many investors commonly make decisions. That is, by…

Short-Termism

In the realm of politics, short-termism is a constant. To start with our terms of government are too short, and our politicians seem to increasingly make decisions based on current polling. Surely their elected role is to broadly consider the best long term strategic options for the country and then make the tough decisions (even…

Resisting Temptation

Many people don’t appreciate it, but an entire industry is built around getting you to trade stocks. The earnings season just provides another trigger for people to click the ticket on your activity.     This short video describes the benefits of doing nothing, beyond your regular rebalancing.

Avoiding herd mentality

What feels safe is often risky, and what feels risky is often safe. This statement contradicts just about every evolutionary instinct we possess. We tend to seek out safety and avoid risk whenever possible. A classic example has to be the instinct that (still) tells us we are safer staying with the group. If members…

Respect the Cycle

One of the first really valuable lessons I learned in my investment career was to respect the market cycle. One of my seniors at Macquarie Bank always used to say “the cycle lives on!” He was right of course. It was the heady days of 2006/07 when the mood amongst traders as well as “Mums…

The Importance of Rebalancing

An important part of a winning investment strategy is regularly rebalancing the portfolio. Rebalancing is required because the market’s movements cause the value at risk of a portfolio to drift. And as the time horizon increases, it is likely that the allocation to the riskier (and higher expected returning) assets will increase – increasing the…