G'day Fools,
In this article, I was a little annoyed. Righteous annoyance, I hope. But annoyance, nonetheless.
See, there's no magic bullet in investing. No-one — at least, no-one serious — expects that an advisor is somehow going to be able to turn a volatile and challenging pursuit (investing!) into a smooth, ever-upward journey.
Upward, yes. Over time. But not without bumps.
"Life moves pretty fast." Ferris Bueller once told us. "If you don't stop and look around once in a while, you could miss it."
I don't make a habit of taking life advice from 80s movies (though I'm never sure if that's a good or a bad thing), but Ferris was pretty right.
Yes, in a pop-culture kinda way, but in a deeper way, too, even if he didn't mean it.
I was listening to a podcast the other day when the interviewee, an economist, mentioned the difference between working in the government and private sectors.
The government, she said, was slower paced, allowing more time for deep thought. The private sector was more fast-paced.
And it got me thinking about investing. More specifically, about your service, Motley Fool Share Advisor. Some of you have been around since our very first recommendation in December 2011. Some of you joined this week.
If I've been doing my job right, nothing I'm about to say will surprise those long-time Fools. And, if my experience of the financial markets is anything to go by, most of what I'm about to say will come as a shock to many of the newest members of Fooldom.
Here are the central tenets of successful investing:
- Nothing, these days, is new or ground-breaking when it comes to investing well
- If we have seen further — or invested better — it is, in the words of Sir Isaac Newton, by standing on the shoulders of the giants who have preceded us
- …
I couldn't think of a third.
Which, frankly, makes it hard to sell financial advice. At least, if we're going to be honest about it.
I mean, it doesn't stop some people. They conveniently forget those two tenets, and instead focus on separating a (lower-case-f) fool from his or her money.
They appeal to your intellect. Or, more accurately, your ego. They appeal to your fears. To your greed. They sell you things you don't need. Induce you to take actions you don't need to take. Frankly, to do whatever is necessary to part you from your hard-earned.
Ah, but doesn't Motley Fool Share Advisor do exactly that? Well yes, and no. We sure as hell tell you that we think we can beat the market. We have 5-plus years of track record to back us up (though we never, ever let success go to our heads. Pride definitely comes before a fall.)
But we don't induce you to trade. We don't make commissions on what you buy and sell. And the only reason we keep your business is if you decide we're worth it. If the value you get from your membership exceeds its cost, you'll hang around. If not, we'll see you 'round. Sounds fair, right?
There's a problem, though, for you and for us.
We don't promise, nor do we deliver, instant results. We don't specialise in confirmation bias. We won't call you to congratulate you on your winners, slyly never mentioning your losers. We don't — won't — sell you 'action' over 'patience', even though the former sates the very human desire to do something.
So many members join Motley Fool Share Advisor after watching business television or dealing with a stockbroker who had convinced them that activity equals success. Some of our members want a new recommendation every week. Others see the last 2 recommendations in the red and call us names.
I don't blame them — such is the financial services industry's marketing, it's not surprising in the least. I blame the industry. But it means we have some decent deprogramming to do once new members join us.
And even those longer-serving Fools aren't completely inured from the siren song of the fast buck and the seductive advertising. Or from 'the one that got away'.
The last five-plus years have been a good reminder. We've seen the graphene, lithium, pot-stock and bitcoin bubbles come and go (and the latter come again). I've personally answered more than my fair share of 'But what about [insert latest fad here]?' emails.
Or, my favourite, the doubting Thomas who says 'Well, your old recommendations were good, but the new ones suck… just check out the difference in returns'.
I'm (usually) polite to our mate Thomas, as I remind him that he's unwittingly put his finger bang on the source of most of our success.
Time. Patience. Letting our companies get on with it.
Companies like Seek (ASX:SEK) and Corporate Travel Management (ASX:CTD), which we still think are market-beating companies from here on. And Washington H. Soul Pattinson (ASX:SOL). Businesses we know and like. Just like all of our Buy recommendations.
In our 'trade now, ask questions later' financial culture, it's no wonder that in his haste Thomas' very criticism hid the answer he sought. But it's there, in black and white. On our scorecard.
All of our failures. All of our successes. And the average return of both.
Now, I'd humbly suggest there's a little more than just 'time' to what we do. I hope we're adding some analytical grunt to the process, and we've delivered above-market returns, thus far at least.
Which is the topic of another article. But one that isn't far from this one in its simplicity.
Because simplicity is at the heart of what we do. We try to do the work in advance. To think deeply about the companies we select. Then select them, and let them do the work.
Which is, for some people, boring. You'll be able to tell those people by their frantic look and empty pockets. They're busy putting money in their brokers' pockets, instead. And the ATO's, courtesy of the tax burden of their overactive strategies.
A few of your fellow Fools are very disappointed right now. They came here for some get-rich-quick black-box trading system. Not for them is this get-rich-slow caper.
They're gunna get rich quick, or lose it all in the process. Guess which…
Fool on!
