Key Points from Canada’s 2024 Federal Budget and Strategies for our clients. Click Here.

Avoid Investing in Stocks Based on Short Term Success

Avoid Investing in Stocks Based on Short Term Success

October 18, 2023

Beware of the “shiny object” syndrome, writes Peter Watson.

One of the most difficult challenges of investors is to ignore the “noise” that often surrounds investing. Much of that noise is based on short-term results.

Investing is done for long periods of time. Short term approaches to investing in my opinion are just speculation.

Guessing is fine when you are in a casino for a few hours. Investing, however, is for real.

The idea for this article came when I was reviewing performance data since 1927 for two opposing investing strategies. The results of the comparison were a little bit like a roller coaster.

Each strategy had their own investing style and at times both were successful and then not. As it turns out these differing styles have been researched for decades and the research, logic and long-term results favour one strategy. However, often investors give more validity to short-term results.

Regardless of the specific investment strategies, having more logic and long-term data to support that approach is needed. Keep in mind that one of the realities of investing is that there are volatile times.

Good investments can lose value and poor investments can gain.

Develop a long-term investment strategy defining your investment objectives and determine how your dollars will be allocated between stocks and bonds. This should be included in a written investment policy statement.

Investing is important. Avoid the “shiny objects.” Invest wisely.

Peter Watson is registered with Aligned Capital Partners Inc. (ACPI) to provide investment advice. Investment products are provided by ACPI. ACPI is a member of the Investment Industry Regulatory Organization of Canada. The opinions expressed are those of the author and not necessarily those of ACPI. Only investment-related products and services are offered through Watson Securities of ACPI. Peter Watson provides wealth management services through Watson Investments. He can be reached at www.watsoninvestments.com