Cheetham Jackson - Smart Investment

CHEETHAM JACKSON 13 There’s an old saying that’s as true today as it ever was: “A fool and his money are soon parted!” ‘Get Rich Quick!’ schemes will always attract the naive, inexperienced individuals who usually have more money than sense.Then there are the lottery winners, and those who buy premium bonds and ‘come up’ on ‘ERNIE’. However, they are very much in the minority and, statistically, you are more likely to be struck by lightning than winning the lottery. Most successful investors make their money over time. We believe the most consistently successful strategy for building long-term financial security is to own a balanced, diversified portfolio, and to plan to hold those investments for the long term. Historically, equities (stocks and shares) have provided higher returns than any other type of investment.We know that past performance doesn’t guarantee you’ll experience the same results in the future. But investing in, and getting a share of, successful companies’ profits in the form of dividends, and holding those shares so that over time they rise in value, is in our view, a proven, successful way to build your wealth over time. The value of shares, and their dividends can rise and fall, and as companies go through the business cycle, their values and dividends can and will fluctuate.That’s why it’s important to invest for the long term and to stick with the plan. Many investors believe, and are encouraged to believe, they can somehow predict the future prices of shares, and thereby buy low and sell high.This seems simple enough, but is, in our view, impossible to achieve consistently.When stock markets are rising, there is an almost over-whelming temptation to ‘buy in’ and when they are falling, there is an even stronger temptation to ‘sell out’. We believe this is akin to gambling. Speculation on the future prices of investments is gambling.We know of no stock-broker or fund manager who can predict the future prices of investments with any degree of accuracy. Therefore we do not recommend speculating or gambling with investment capital. Instead of trying (and failing) to ‘time’ the market, we recommend a proven successful alternative: simply put, it is time in the market. Investing in a balanced diversified portfolio with a ‘buy and hold’ strategy is our recommended strategy. Interestingly, it is the same strategy as that used by one of the most successful investors in the world,Warren Buffett, and if it’s good enough for him, we think it’s good for our clients, too. Invest for the long term Timing the market? Or time in the market? Patience and Discipline