Being a successful investor requires the right mindset, specifically the ability to apply long term thinking to situations where the practicalities of everyday life do not make this an easy task. It requires remaining focused on an end-goal, one which most often seems intangible and a long way into the future, all whilst the world around you keeps growing and evolving, appearing much more tangible than the end-goal.
As an investor, part of the ongoing challenge is disassociating yourself from the avalanche of information at your disposal, which may lead you astray and ultimately detract from your end-goal. The solution does not lie in the avoidance of information, but rather in correctly categorising and processing the information that you absorb. Many times, the information presented to you creates the impression that immediate action is required in order to see yourself through.
Managing this challenge can be very tricky, as it is not always clear at the time whether taking action will increase the probability of achieving certain long-term goals, or have the opposite effect altogether. Doing nothing can be the hardest (in)action to take at times.
However, our job is to advise no action be taken about as often as recommending a certain course of action. This should be considered in context. Our job is not to react to every piece of information that becomes available. Our job, in this area, is to ensure that your investment assets are suitably positioned in order to maximise the probability that your long-term goals are met.
We know that an immediate reaction will often times only take into consideration the latest data point in a long series of data points, so to speak. Following this logic is a good way to reduce the probability of achieving the end-goal of any investor.
While this may seem like an indictment of the world around us, we by no means want people to live in isolation from information. Missing data points can also cause a skew in the way that you perceive situations.
It takes time to build towards the achievement of a goal, and attempting to measure the success of a certain investment strategy too frequently may not be the best way to go about it. It is thus important not to peek too often, not every peek will show a peak.
There is positive and negative information presented to us each day, but not all of this information will prove material in the bigger scheme of things. We have to correctly and holistically place the information we receive into the bigger picture, and make our decisions from there. As the old saying goes, “You can’t see the forest for the trees”. Sometimes, you need to take a step back.
To us it is far more important to be purposeful in the actions that you take than to be industrious, and constantly making changes to your investment portfolio. In fact, too much action may, if nothing else, increase “friction” (time out of the market, transaction costs and early realisation of capital gains tax) and dampen your long-term investment success. These are best left delayed, as you can earn “opportunity income” on the assets that would otherwise have been used to settle these expenses.
Our philosophy has always been one of long-term investing and thinking. Our discipline is living by this philosophy. Before we take any action, we ask ourselves whether this will help our clients reach their goals. Based on this answer, we either take the next step or go back to the drawing board.
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ADDITIONAL INFORMATION (where applicable)
Performance has been calculated using net NAV to NAV numbers with income reinvested. Full performance calculations are available from the manager on request.
DEFINITIONS (where applicable)
Annualised Return: Annualised return shows longer term performance rescaled to a 1 year period. Annualised return is the average return per year over the period. Actual annual figures are available to the investor on request.
Highest and Lowest: The highest and lowest returns, since launch, for any rolling 1 year period have been shown.