An article written by Tom Bradley (tbradley@steadyhand.com) titled Why the undiscussed really matters is both interesting from a philosophical point of view and from the standpoint of an investors. The article referenced a column from Gillian Tett of the Financial Times who quoted Pierre Bourdieu of France who said it’s not what we discuss in public that matters, but what we don’t discuss that’s really important in terms of reinforcing the status quo.

Mr. Stanley believes the following items do not garner enough conversation.

Investing based on short-term strategies and forecasts is futile.  If you are focused on the short term something may work for a while, but the world is complex and invariably you will lose money. In addition, the biggest advantage as an investor is time.

Time and risk are at the core of investing  An investor needs time to unleash the power of compound interest. Time is linked to risk, the risk is not achieving a reasonable long-term return.

Valuation is way more important than central bankers, politics and capital flows. While there are many things to consider for bonds the best predictor of medium-term returns for bonds is the yields, and for stocks it is price to earnings multiples.

The interests of the wealth management industry are the not the same as the clients. Warren Buffett said Wall Street makes its money on activity, you make money on inactivity. If you really look at the compensation of Wall Street, much of it is based on new products, sales strategies, and strategy shifts. For the average investor most of the time the best strategy is not to do anything.

Emotion is the most consistent crippler of portfolio returns. You have heard many times buy low, sell high. When markets move you feel the need to change your plan to suit the market. What if you had a plan which took an appropriate risk in the first place, then you could weather the storms better.

Linking to dividend paying stocks, much of what Mr. Stanley has written can be easily translated into dividend paying stocks. The stocks are profitable and you bought them at a low and decided to hold them for a few years. The price will go up and down, but the dividend and the fact they are profitable allows the price to advance as you hold them. As an investor you want to ensure the companies stay profitable or find better alternatives.

There are more questions than answers, till the next time – to raising questions.