Panning for gold..it takes time but if you are persistent….
Thursday 10 April 2008
This is a long video, yet it does have nuggets of gold for investors. Warren Buffett has built a reputation as an investor or as he puts it a specialist who allocates capital. If you have time, listen to it…there are some interesting points which can help an investor's understanding.
There are also some lovely quotes…."you only need to get rich once"…yet investors keep risking assets they don’t need to risk. There is sometimes a loss of perspective by investors simply because old habits don’t die easily. Part of our remit is to help investors put the right mind set to investing.
There is also a fascinating insight into the problem of Long Term Capital…suffice to say the firm imploded in 1998 losing $4.6 billion in less than four months. Buffett sums up with more quotes “Why smart people do dumb things”…and about the owners, who were all rich and very smart, he says “to make money they didn’t have and didn’t need, they risked what they did have and did need”…. “why risk something that is important to you, for something that is unimportant, that doesn’t make sense, whatever the odds”
Clearly, understanding the risks is the problem and investors often need outside analysis to help see the wood from the trees. Moreover, even the smartest people find it difficult to make forecasts, yet most investors employ advisers and fund managers that do exactly that…make forecasts. Most are nowhere near as smart as those at Long Term Capital - and with their Nobel prizes as well!
Our approach is somewhat different and Buffett provides simple advice to investors which we endorse. An example is diversification. Of course many investors think they are diversified, but often knowing what you are invested into and the risk is more difficult than it appears. See our blog about Fund Classification.
Moreover, we do not make forecasts. John Kenneth Galbraith said "The only function of economic forecasting is to make astrology look respectable." Say no more!
Our approach to investing is based on science, not speculation. We do not make investment decisions with our clients' or our own money based on our personal "beliefs." Our disciplined investment management process is based on decades of objective financial research and removes emotional interference, providing our clients with fewer surprises and a smoother investment journey.
Categories: Diversification, Asset Class Management
posted by Murray Round Wealth Management @ 10:32,
The Authors
Nicholas Round
Nic is the Managing Director of Murray Round Wealth Management Limited, who seeks to ensure the advice provided is truly independent. Based in Shropshire with clients local, national and worldwide, Nic has strived to find the best possible service for his clients needs, by researching and studying the market, trends and philosophies. Nic strongly believes Asset Class Management will bring his clients Financial Freedom, Independence and Happiness.
Kirsty
Kirsty is our communication guru. Managing information requires considerable due diligence and her passion for organisation gives the clarity we all seek. From Shropshire, with a Psychology Degree and much travelling, she is now back in Shrewsbury...and London often, keeping us all at Murray Round focused.
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