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Investment is all about passion...not passion investments

By Chris Bailey of Financial Orbit | Monday 24 December 2018


Perhaps it is just too close to Christmas but i am surprised there is not more about the various shenanigans in global stock markets in the weekend press.  Of course the retail angle is played out en masse and this is fair enough given it involves us all at some level and consumption is two-thirds of our economy (and the same for most other developed market economies).  I have no view about how 'Super Saturday' went given my proclivity to go shopping at the same time as everyone else is approximately zero...but clearly it has been a long way from easy.   

Anyhow back to the stock market per se.  I was pulling together some thoughts for a recent presentation I gave and I came across a quote from one of my investment heroes - the legendary ex-Fidelity fund manager Peter Lynch - that I had never heard before: 'everyone has the brain power to make money in stocks.  Not everyone has the stomach'.  I think this is very correct - and you especially see this at times of strife and uncertainty in the markets, such as now.  
When I write or talk about investments, i inevitably get onto the subject of doing your own research, 'getting your hands dirty' and generally really being involved in your investments.  It is your money after all.  In short I am all about exhibiting passion about your investments and funnily enough the more work you do, the luckier you get.  It also should put you in a better position to spot value when stocks struggle and exhibit volatility as we have seen in recent weeks and investments feel difficult or impossible. 
However all of this requires work...and many will conclude (especially at times of stock market strife) that their passion for investments is at a low ebb and that the world of stamps, luxury goods, property, classic cars, trainers, wine, art...or something else is - as a big article in one of the main Sunday newspapers talks about - where they should be putting their money.  This is all fine, but the rules of the road noted above matter in these 'passion investment' areas too - and perhaps even more given most of these alternative areas do not have a ready, liquid, highly traded market.  
In short, beware the risks of panicking out of investments when the stock markets are volatile to areas which seem beguiling.  As always a little bit of knowledge can be dangerous.  Don't invest in what you love...invest time in trying to understand in what you love...and obviously because you are reading this website we all know that shares despite ongoing volatility are going to remain a very important part of this.  Just keep on doing that work...

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