Weekly Thoughts 02 June 2017

I believe that predominantly the investment industry panders to the greed of companies and individuals. The term ‘good’ is usually used where one company is producing better returns than another. Returns as in growth of capital value, not necessarily for anything else that an investment might do for you.

This process would involve the ability to constantly buy shares cheaply and sell when expensive. Which in and of itself is fine and potentially correct for the function of growth not income. But the process needs someone else to be on the ‘other’ side, someone to have bought expensive and sold cheap. Because otherwise there are no shares to trade at those points in time. Like you cannot sell your house when you think the price is good if there is not someone else around to buy for why…. in the season when you’re thinking it is time to sell? This investment process is simply a transfer of wealth from one person to another. Winners gain at the expense of losers. Which no-one will mind as long as they are the winner. That is the nature of the human species.

The buying and selling of investments, or trading, happens all too often in the investment industry. I often, often, hear my investment consultants talking about how advisers, or the clients themselves, switch funds at poor times and often change their entire portfolios during one year. This is not investing. This process could be called speculating. Indeed, it was refreshing to hear an Investec Fund Manager when presenting in Durban in March this year, only talk about the 10 and 20 year value growth figures of his fund. We should not be looking at 3 months, 6 months, 12 months, 2 years or even 3 years. Then we’re investing for the wrong reasons.