People always ask me about risk in investing. In my opinion, the biggest risk is not being in the market and not collecting dividends. For over twenty years, Baskin Wealth Management has kept its clients close to fully invested in stocks, bonds and preferred shares. For us, absent short-term liquidity needs, cash is not a suitable asset for anyone. This strategy has worked well for our clients and this is the strategy that we will continue to use for the next twenty years.
If you think you can outsmart the market, then good luck to you. If it is true, you will be among the rarest of investors, the very few who know when to sell, what to sell, when to buy back, and what to buy back. Maybe you can always get all that right; we know we cannot. Investing is hard. Removing unnecessary decisions from the process makes it easier. The fewer the transactions, the fewer the chances for bad mistakes.
As the Chief Investment Officer at Baskin Wealth Management, I have to wake up every day fully confident in our investment strategy for our clients: buy, hold and monitor. Stock prices may fluctuate, but if companies’ profits are improving and dividends are being paid (ideally even going up year after year), we stand pat. We only sell when we discover a better investment idea or if we find we have clearly made a mistake in our thinking about an investment. We never sell due to movements in stock prices. We sell when our view of the value of a stock has changed.
The past 17 months have been a challenge for most investors, including us. The S&P 500 has been flat and the S&P/TSX Composite Index has gone down. Over the last year and a half, simply not losing money was the best most could hope for. We accept the reality that markets are like that. We don’t know if tomorrow will be the start of a new bull run or a full-on bear market. Even if we did, our thinking would not change. We continue to find great investment ideas to fill our clients’ portfolios, and we are confident in our strategy, which is to stay invested.
Barry Schwartz May 30, 2016