Last month I wrote an article for The Daily Reckoning, one of Port Phillip Publishing’s free daily newsletters, titled, Invest Well, Rest Well. We were still a few weeks away from officially launching the Guild to new members. And I wanted to highlight the importance of putting together an investment portfolio that allows you to sleep well at night. One that won’t keep you up worrying about each new peak or trough in the markets.
This month I put my own advice to the test. Three days after we opened up our investment network to new Australian members, I left the Albert Park office for 19 days. That’s right. We had just published our initial investment recommendations for all three Guild portfolios as I headed out the door…and off the continent.
With today’s technology and a job like mine, you might think, so what? We live in a connected world of smartphones and the worldwide web. Surely I could simply check in with the head office over morning tea.
If that is what you were thinking, I’ll wager you’ve never travelled down the desolate peninsula of Baja, Mexico. Or visited the narrow coastal strip called Punta Banda, south of Ensenada. This is where my Dutch, American, and Australian family had chosen to gather for a long overdue family reunion.
The weather was perfect. The water was warm. The beach house had panoramic views of the Pacific Ocean on one side and a nature preserve estuary on the other. The family was in good spirits. And the nearest internet connection was more than an hour away over roads that brought back memories of my outback adventure through the Northern Territory.
Free Reports:
Get Our Free Metatrader 4 Indicators - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter
Get our Weekly Commitment of Traders Reports - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.
Two weeks off the grid and no worries
I suppose if I’d felt the need I could have dodged the menacing potholes and made the trip to some seedy internet café in Ensenada. I could have checked my office emails and logged onto the Guild’s portfolio page for fifty pesos. And, if I had been stressed, this would have put my mind at ease.
If I were travelling today and felt pressed to check, I’d find that 10 out of the recommendations are up and only two are down. These gains easily outweigh the small, current loss.
Now you can see why I wasn’t stressed. Why I didn’t feel the need to check in. I didn’t even have access to a newspaper. It’s fantastically liberating to simply disconnect for two weeks. Because, in truth, the only two things that are more important than creating and building your wealth are your family and your personal wellbeing.
And I was having far too much fun to lose sleep — or beach time — worrying about how our portfolios were performing on any given day. I wasn’t keeping up with the latest actions in Ukraine, Gaza, or Iraq. I was, temporarily, unaware that Australia’s unemployment rate had reached 6.4%. Or that the ‘misery index’ was now at a six-year high. And I was wholly disconnected from the latest data of the HSBC-Markit China manufacturing purchasing managers index.
Of course the first thing I did on my return to ‘civilisation’ was dive into every online and hard copy news source I could get my hands on. Not to mention the stacks of fresh investment newsletters published by Port Phillip and our international affiliates during my absence.
Because all of these factors, and hundreds more, can and do have an effect on some of the Guild’s investments. The market is a fickle beast. It certainly was a possibility that some of our investments would have lost value if global markets suffered a serious setback.
That’s why we have trailing stop losses in place, to manage just that type of unwelcome event. It’s also why the Guild’s investments are well diversified. And why we recommend investing only in quality companies likely to suffer smaller losses in the event of a market downturn. Businesses prone to bounce back quicker during the inevitable recovery that follows such corrections.
So I was able to happily ignore our investment portfolios for 19 days. And with good reason. I was, and am, highly confident in our investment director, our board members, and our investment system.
An all-encompassing investment system
I’d like to tell you how important it is to employ a proven, dependable investment system. But I don’t think I can put it any better than the Guild’s Global Investment Strategist, Alexander Green. Here’s what he has to say:
‘No one, not even professional economists, knows what the economy will do. Market timers might as well be hawking opinions on The Psychic Network. And while we all appreciate a superb stock recommendation, chances are slim that one stock will dramatically affect the timing or quality of your retirement…
‘What every investor should really seek first and foremost is an all-encompassing investment system, one that will generate above average returns in the good times and protect their hard-earned capital when things go off the rails, as they inevitably do from time to time.
‘During 16 years in the investment management business, I would often have a prospective client ask if I could help him or her. “I don’t know,” I’d say. “Let me take a look at what you’re doing now.” When they showed me their portfolio, I generally saw a list of securities — bought at various times and prices — that didn’t seem to have much in common.
‘In fact, they didn’t. Folks would often tell me they read about this stock in BusinessWeek and learned about that fund from their golf partner. I called it investment by agglomeration. Because that’s what it really was, just a jumbled cluster of investments put together with no real forethought, no particular asset allocation and no battle-tested “Buy” and “Sell” discipline.
‘It takes a lifetime of hard work, sacrifice and thrift to build a substantial nest egg. Should you really treat it like chips in a poker game? Every investor should use a proven, battle-tested investment system, one that maximizes your returns in the good times and safeguards your capital in the bad ones.’
Alex is spot on with this advice. And his system has been rewarding subscribers to his own investment service for many years.
The Guild’s portfolios are designed and put together uniquely for our members. Our Australian and International Board Members all have their own services, newsletters, and portfolio recommendations. We do not republish their specific recommendations. But we do make use of a time-tested system shown to deliver above average gains with below average risk.
And that allowed for an excellent, relaxing break on the Baja coast.
Regards,
By Bernd Struben,
Chairman, Albert Park Investors Guild
Ed note: The above article is an edited extract from Albert Park Investors Guild.
From the Port Phillip Publishing Library
Special Report: The explosive investment style providing consistent opportunities to thousands of Aussies…
The post These Investment Portfolios Pass the Baja Vacation Test appeared first on Stock Market News, Finance and Investments | Money Morning Australia.
