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The theme of my 30-45 minute presentation is that most stock investing perceptions are actually misperceptions. Here are four common misperceptions:
- You have to watch it like a hawk: No you don’t, if you buy the right kind of companies. I bought shares of Bank of Nova Scotia in 1992 for $5.59 per share. I have collected about seven times my original investment back in dividends, and the shares now trade for about $76.00. How much watching like a hawk did that take?
- The Market is Risky: There are risky, speculative stocks, but overall the market is NOT risky. Every bear market has given way to a new bull. After the 2008/09 financial crises I was back to my previous high values within 3-4 years and today I am about 2-3 times my 2007 levels. The market is however volatile. Risk and volatility are commonly perceived to be synonymous but they are completely separate entities. Understanding this will significantly enhance investing returns. If you don’t believe me, please Google what Warren Buffett has to say on the topic.
- You have to be an expert: I might be considered an expert in my field of agriculture, although many acquaintances would even disagree with that! I have never worked in the field of finance. Yet my success and returns would rival and exceed most experts. There are advantages to being a smaller investor, like you aren’t going to get fired for making a mistake. Fund managers often follow the crowd because sticking their neck out and getting it wrong can cost them their jobs. However, with investing, avoiding the crowd will lead to greater success.
- You need to be able to predict where the market is going: Statistics show that less than half of predictions turn out correctly. Nobody has been able to regularly call changes in short term market direction. Best to simply understand that the market is volatile (not risky), and that average annual returns for the past century have been about 10%.
I will share another four common misperceptions at some point in the future. If you are involved with a group and would like to hear my full presentation, please email me at email@example.com