Tuesday, November 18, 2014

Money Show 2014 - Iain Butler

Iain Butler is an advisor at the Motley Fool. His talk was called "Long Term Investing in a Short-Term World". His slide presentation is here.

Individual investors are slow movers and this can be an advantage over Bay Street. The foolish approach thinks that time in the market will be your greatest natural advantage. They think that timing the market is a fool's game.

Dennis Gartman on BNN said on April 7, 2014 that he sold all his stock was zero exposed to the stock market. On April 14, 2014 he said he was pleasantly long on stocks.

Institutional investors are evaluated every 90 days, so they cannot invest long term. What they do is copy the market index because they are measured against the market index. They are what are called closet indexers. Institutional money is also called the smart money.

The foolish way is to focus on great companies and hold them for the long term. As John Reed writes in his book Succeeding - "When you initially start to research a field, it seems like you need to memorize a zillion things. You do not. Exactly what you require is to identify the core concepts - typically 3 to twelve of them - that govern the industry. The million things you thought you'd to memorize are just different combinations of the core principles."

Iain Butler says there are 4 ways to invest. This is the complete list and 3 and 4 eventually become #1
  1. Unsuccessfully
  2. Long Term (with varying degrees of success)
  3. Short Term (success due to luck)
  4. Short Term (success due to manipulation/fraud)
According to Warren Buffet, time is the most important valuable in investing. Most investor's definition of long term is the time between now and the next bear market. Real estate feels like the best investment only because people hold it for the longest time. You will never have regret over a 20 year investment because you will never have a negative return.

Do nothing are the two most powerful words in investing. The big money is not in buy and selling but in sitting. Dollar cost averaging is boring, but can produce a maximum return. The preference should be with companies that reward shareholders with Dividends and Buy Backs.

A rule of thumb is that is the market has done poorly over the past 10 years; it will do great over the next 10 years. You should have a list of stocks you want to buy and keep it for the time when the market falls. A 10% correction happens once a year.

On my other blog I am today writing about Encana Corp. (TSX-ECA, NYSE-ECA) ... continue ...

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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