Saturday, November 19, 2011

Live long and prosper


The initial idea of writing this blog was to help starting investors to find their way. It was also to support these investors to get through the tough times and to give them the perspective and strength to hold on to their investment strategies.

Retail investor portfolios do often underperform NOT because the mutual funds that many invest in are poor. Rather because retail investors don’t stick with them, thus incurring commissions, taxes and the disastrous results of market timing. Mentally, humans are not set up for stock market investing because many of our decisions in the real world are emotional made in split seconds when our survival is endangered. What is good for the goose is not necessarily good for the gander. Investing is supposed to be unemotional, analytical and boring. You put your investments in a box rather than trading them continuously responding to each market temper tantrum.

So if this blog is such an essential tool demanded by millions of young investors, why is the number of blog followers so modest? The typical post is read some twenty times. With 188 posts as of today, you would think that people buying 1000s of investment books for big dollars; and people subscribing to expensive investment letters would flood this blog that is free. But no, statistics show only a small number of followers. Yet it adds up, since inception in February 2010, we’ve had over 11,000 page views (not counting my own). Nearly 35% of visitors are from Canada; 25% from the U.S, another 5% from Russia, 4% from the U.K, some from Germany, Holland and even Japan. I am flattered but this does not come even close to the traffic of Google or Facebook. I can even see which posts are of most interest to the blog readers (see below).

But just like when I teach my geology courses to the oil industry, there is one other beneficiary which is even more important to me than my course participants and blog readers. Yes that is the teacher or here the blog writer, i.e. Godfried Wasser – Me. I realize that by formulating the investment process, by trying to step back from the noise of BNN, the newspapers and the stock markets, I become more aware of investment issues and of the back ground stories that are really important to me the investor.

It is not that my advice is always dead on and 100% correct. Far from it. I write here as I see things in today’s light not as they actually evolve in the real world. I show in these posts the emotions and thoughts I go through every day. I often review my own posts to see how good my guesses were or what I said about investment strategies and compare it with what I actually do. I notice that most of the time I do try to be consistent to my ideas presented on this blog and that it somehow works. The blog does also show how I fretted about selling off the riskier stocks in my portfolio in late September. Was this an act of panic or was it well thought out but late in implementation?

I share these thoughts so that you the reader may notice that even after 30plus years of retail investing, I still have doubts and fears every day in the market. It is part of the investment game and it is crucial that you are honest to yourself. Even if you like to brag to your friends about how successful you portfolio is and how smart a guy or gal you are, you have to be able to admit to yourself that you make losses and mistakes as well. It is often that you learn most from your losses and mistakes. With that may come the attitude than nothing is really for nothing. Oh, and I do make the same mistake more than once – stubborn like a donkey and on top of it, utterly foolish.

Reading over the old posts, I realize also that many of the ideas posted here are indeed valuable and worth adhering too. I revisit other posts than the top ten listed above. Lately I revisited the post: What-stock-market-environment-do-you think we're in as many other blog readers have done. Another post I often return to is: Update on natural gas prices. Also ‘2011 outlook as guessed by GW’ is often revisited just to see how my thinking has evolved and how much was right and wrong. That is why I updated my outlook for 2012 in a recent post. It lists the scenarios that I think will most like shape the investment world in 2012. Remember though, you need several scenarios for your portfolio risk management. A few days ago, BNN broadcasted the Munk Debates – a truly outstanding source for potential economic scenarios.

So, as much as I am concerned about helping beginning investors start on the path to their personal Belize, this blog helps me to define and stick to my own investment strategies as well. Thank you for following this blog and, quoting the most logical being in the known universe – Spock: may you” live long and prosper”.

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