Managing your portfolio is managing your risk. Controlling your risk means creating a portfolio that is properly diversified to meet your current and future needs. Worrying and reacting to events that you cannot control, such as a default in Greece, is not managing your risk. In times of market stress the value investment approach is the only strategy that makes sense. When markets fall, momentum investors cannot find momentum and growth investors cannot find growth. But value investors who analyze a company’s assets and earnings capabilities to determine fair value are able to drop an anchor and stay the course in turbulent times. At some point your value purchase will reach fair value and that will be your guide to sell.
Waiting for the market to go higher is not an investment strategy. Good investment ideas are found when investors over-react on the downside. At Baskin Financial, we choose to buy companies with clean balance sheets, a history of rising dividend payments and low valuations. There is no shortage of opportunities right now for the value investor.