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Monday, July 15, 2013

The doctor's thoughts on keys to successful investing

Regular readers will know that I have two favourite Australian economists (there's no way for that not to sound nerdy) - Felix Stephen and Shane Oliver.

Shane Oliver - sorry Doctor Shane Oliver - recently wrote a great article on Keys to Successful Investing, which I found to be relevant, easy-to-understand and entertaining.  All of which you have to admit is fairly surprising given it was written by an economist :)

A lot of his points confirm issues I've raised in previous blogs (a fresh perspective is always valuable), and he highlights some areas where he feels investors may have lost sight of what's really important.

His key points include:
  • Four investment market realities: there is always a cycle; it's a mad, mad, mad world; starting point valuations matter a lot for returns; and the power of the compound interest.
  • Keys to successful investing: know yourself; seek advice; invest for the long term; diversify; turn down the noise; avoid short-termism; focus on investments offering sustainable cash flow; recognise there is no free lunch; buy low, sell high; don't fret the small stuff; don't over rely on expert forecasts; recognise the aim is to make money, not to be right; beware the crowd at extremes; and if you have the right strategy, never despair.
Anyway, I don't believe in re-inventing the wheel, so click here if you'd like to read a full copy of the article.  I really do recommend it.

Talk soon,

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