A school motto offers a timely reminder for investors to keep striving in challenging times, and embrace the future with optimism.
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“I need a quote to go at the end of my email,” one of our team said out loud the other day.
We all work predominantly from home, so the audience was that person’s teenage son, Lachie, and his girlfriend.
She suggested something from Stephen Hawking.
Lachie suggested his school motto, “Many pathways. No limits.”
In the end, we went with Hawking’s “Intelligence is the ability to adapt to change” – he’s obviously one of the greatest minds of our age, and 2020 has been nothing if not a year of change.
But Lachie’s idea got me thinking.
His school motto is a wonderful exhortation for kids who are all different and all looking to make their different ways in the world.
But it’s also a good reminder for investors.
As you might know, we don’t enforce a ‘house view’ on our team here at The Motley Fool. The investment team agrees on a lot, differs on some things, and disagrees vehemently on a small remainder.
For those of our members who want us just to have a single view, that can take some getting used to.
But here’s the thing about investing: invariably, it’s best if a particular style or strategy is allowed to play out in full. If we started to pull punches on some of our more controversial ideas, we’d find ourselves slowly but inexorably dragged into the boring, average – and probably financial inferior – consensus.
Yes, we might avoid some losing stock picks. We might avoid some ‘own goals’. But, in all likelihood, we’d also miss out on some – or many – big winners.
After all, if the market already saw it our way on those companies, the share price would already be meaningfully higher, and the potential for outperformance would be drastically reduced.
And here’s how it plays out: each of our entry level services, Share Advisor, which I run with Andrew Legget; Extreme Opportunities, which Anirban Mahanti leads with Kevin Gandiya; and Dividend Investor, which Ed Vesely helms, with Chris Copley and Kate Lee, is beating the market.
(Yes, that’s a slight brag: it’s hard to have one service beating the market, but pretty impressive to have 3 out of 3 in front. But more on that later.)
The thing is, there are relatively few companies that are common to more than one of those service scorecards.
There are companies I like that Anirban wouldn’t buy. There are businesses Ed is a fan of that I just don’t share that view of. And Anirban’s companies tend to be smaller, growth-ier, and focussed in areas Ed or I don’t have similar expertise.
Couldn’t we just take the best of each? Yep, and we do have a service, called Motley Fool Gold Pass, which does exactly that. But the fact remains that each service is individually delivering strong, market-beating, returns, with some pretty different investment strategies and companies.
“Many pathways”, as Lachie said.
And yet, just like Lachie’s school, we’re not just a random collection of stock-pickers, thrown together. There are things that bind us. Principles and values.
We take a long-term perspective. And no, despite what you might hear from others, ‘long term’ isn’t next month. We look out 3–5+ years when we make our investment decisions.
We don’t use charts or trading software.
We invest in businesses, not three letter ASX codes.
And as to “No limits”?
I also think it’s an appropriate slogan for all investors.
It’s a reminder, to me at least, that we shouldn’t be constrained. There is no reason investment returns can’t compound meaningfully for many, many decades to come. There’s no reason you can’t learn about a new company, industry, product or market. You are not – should not – be limited to just investing in Australian companies.
You know what else struck me about it? It feels almost a little hokey. A little saccharin.
We’re supposed to be a little cynical, right? A little dour. We’re supposed to remember all the things that can go wrong, and instinctively recoil from optimism.
And I can’t completely disentangle myself from that sense.
But I think it’s important to try.
Of course not everything is perfect. Of course there will be bumps, losses, and periods of genuine gloom.
But it’s also important to pick yourself up, dust yourself off, and keep striving.
To be optimistic, and to believe that the future will be better than the past.
Which, frankly, might just be the best lesson we can take from 2020 – in general, and as investors.
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Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.