Tag Archives: Long-Term Investing

Should we buy the dip?

Last Wednesday we saw a broad sell off in global equity markets. We had not seen this degree of a sell off for quite some time. For instance, the most widely used ETF (QQQ US) of the NASDAQ 100 Composite Index fell 2.54%. The next day QQQ rose by 0.87%, and on Friday it rose again by 0.42% – closing at a level that was just 0.87% away from recent highs.

Our foremost mission is to safeguard our clients’ capital. Therefore, when faced with drawdowns of a significant amplitude, we must decide whether fight or flight is the most appropriate response. In other words, should we be selling, or should we buy the dip?

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How Most Investors Underperform The Market

In our January commentary we wrote:

Although we have been taking profits on some of our high-flying stocks, we do not intend to try to time the market by selling stocks that we like in the hope of buying them back more cheaply in the future. This is called being ‘cute’. ‘Cuteness’ is the domain of babies and puppies, not investment managers.

We continue to abide by what we wrote.

LINK: Our January Results

However, it seems as if cutting and running is a huge problem for retail investors. Panic induced selling leads to missing returns as markets recover and trade higher.

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Peter Thiel, Hamlet and Investing for the Long Term

Not too long ago, Peter Thiel gave a commencement speech at Hamilton University. Commencement speeches are given at university graduation ceremonies to impart a last bit of wisdom to students as they head off from academia into the wider world.

LINK: Thiel commencement speech

In his speech, Thiel entreats his listeners to continue to make things new and to keep advancing all technologies. He finishes by addressing two common pieces of advice that they should ignore: 1) “to thine own self be true,” and 2) “live each day as if it were your last.”

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The NHL Draft, the Toronto Maple Leafs and Embracing Cyclicality

Imagine that you are part of an association of 30 investors that have exclusive purchase and holding rights of the world’s best stocks. Every year, the top performing portfolio will be celebrated by tens of thousands of fans and have its name inscribed on a sacrosanct silver cup. The worst performing portfolio will have the greatest odds of winning a lottery that gives them exclusive rights to that year’s hottest IPO at a fixed price, regardless of valuation or upside.

Sounds pretty good right? Welcome to the National Hockey League!

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“Even God Would Get Fired As an Active Investor”

In this post, Wesley R. Gray, Ph.D. provides a statistical overview of an unlikely, albeit interesting hypothetical scenario: “What if you had invested in the top 10% of stocks over successive five year periods?”

The results are intriguing and a little bit frightening. They show that even the very best performing stocks over a given five year period experienced draw downs that most likely would have discouraged even the boldest of short term investors. However, for those with a long term investment horizon, the returns would have been sensational.

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