Advice for times such as today

BENEFIT FROM WISDOM OF GREAT INVESTORS

1.         Short Term Underperformance.             When faced with short-term underperformance, , investors may lose conviction and switch to another stock / investment. . Unfortunately, when evaluating stocks / investments / managers, short-term performance is not a strong indicator of long-term success. Investors who recognize and prepare for the fact that short-term under- performance is inevitable– even from the best managers –may be less likely to make unnecessary and often destructive changes to their investment plans.

Robert Kirby. Founder, Capital Guardian Trust Company

2.         Expert Analysts recommendation.                    During periods of uncertainty, investors often gravitate to the investment  media for insights into how to position their portfolios. While these forecasters and prognosticators may be compelling, they usually add no real value.  A study of  the average interest rate forecast was carried out from The Wall Street Journal Survey of Economists  from December 1982 –June 2008. This forecast was then compared to the actual direction of interest rates. Overall, the economists’ forecasts were wrong in 35 of the 52 time periods – 67% of the time!

“ The function of economic forecasting is to make astrology look respectable” – John galbraith

3.         Oil Prices, Egypt and Libya.        Do not waste time and energy focusing on variables that are unknowable and uncontrollable over the short term, like the direction of interest rates or the level of the stock market. Instead, focus your energy on things that you can control, like creating a properly diversifed portfolio, determining your true time horizon and setting realistic return expectations.

John Kenneth Galbraith. Economist and Author

4.         You make most of your money in a bear market, you just don’t realize it at the time – L Davis, a legendary investor

It is important to understand that periods of market uncertainty can create wealth-building opportunities for the patient, diligent, long-term investor. Taking advantage of these opportunities, however, requires the willingness to embrace and incorporate the wisdom and insight offered in these pages. History has taught us that investors who have adopted this mindset have met with tremendous success.

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