While I very much enjoy writing this column, my real job is to help people make smart decisions about their money; decisions that are consistent with their financial objectives, so that they can move closer to their great goals in life.
Today I have a message for the people whose financial objectives include the long term accumulation of wealth.
It's time to buy.
I'll tell you more about why it's time to buy in a moment, but first I want to elaborate on this notion of financial objectives. Far too often people take their eye of the ball, and lose track of why they are doing something in the first place.
So when I talk about the long-term accumulation of wealth, what I am really talking about are things like retiring with dignity by maintaining your standard of living in a rising cost world, or providing a post-secondary education for your loved ones that gives them the building blocks for a successful life, or leaving a meaningful legacy to the charities that are closest to your heart. These are examples of great goals.
With the headlines of the day it's so easy to lose focus from your own great goals in life. But here's the thing - that last statement could be made on virtually every single day since the invention of headlines. There is always some white noise distraction happening somewhere. With very seldom exceptions, that's all the financial headlines are -- a distraction. In twenty years nobody is going to care about what happened in the last 30 days.
So for the people whose long-term objectives include wealth accumulation - people who have the eye on the ball and are focused on achieving their great goals - it's time to buy.
I don't mean buy indiscriminately, mind you. I wouldn't be interested in considering owning shares of Facebook unless they were trading 90 percent cheaper, and I think anyone who loads up on fixed income investments right now is likely flirting with disaster.
What I mean is that for people whose long-term objectives include the accumulation of wealth, the time to accumulate larger positions in quality investments is right now, while prices remain attractive.
I could talk about price/earnings ratios and dividend yields, and all the other valuation measures that scream out, "Stocks are on sale!" But rather than overcomplicating things I am going to talk about Gillette Fusion ProGlide razor blades.
The other day I was in the store, picking up some stuff. I had recently bought a Gillette Fusion ProGlide razor, and now I needed some blades to go with it.
Now, if you don't happen to be a consumer of men's razor blades, I'll fill you in on how this racket works. The razor they'll sell you cheap. But the razor won't do you much good without the blades, and it's the blades that are costly.
So, choking back my disbelief at the price, I chucked a pack of 4 blades into the cart and proceeded with my shopping. But, to my delight, when I got to the checkout I found the very same packs of razor blades for ten dollars cheaper.
For this story to really sink in, you need to know a little about my current appearance. On a lark, I haven't fully shaved since last November. I have worn a goatee for years, and on one lazy Sunday in November rather than trimming the goatee, I just thought to myself "I wonder what will happen if I don't shave." Well, you can see for yourself what happens on the Brad Brain Financial Planning Inc. Facebook page. It's a fashion tragedy.
So, even though my current demand for razor blades is sparse, when I got to the checkout and I saw them marked down by ten dollars a pack, what do you think I did? Obviously I bought some. In fact, I got greedy, and I bought the entire display. Buying quality products when they are on sale just makes sense.
So when I had the chance to buy razor blades on sale I didn't lament the price that blades used to sell for. I didn't ponder whether they would get cheaper in the future. It didn't even cross my mind that I would sell any previously purchased razor blades at the current discounted price.
All that happened was that I needed razor blades, and they went on sale I bought a bunch.
Guess what? Investors should look at the investments they need in precisely the same way that I looked at razor blades. Precisely the same way.
Some nervous people might say, "Sure markets are cheap, but what about all this fear and uncertainty?"
Exactly! It's that very same fear and uncertainty that allows us to buy quality investments at discounted prices. And, as Warren Buffett says "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."
So what are you waiting for? The price of razor blades to go up? Go get your chequebook out of the drawer and get on in to see your financial advisor before the big sale on quality investments ends.
If you don't buy when things are cheap, what are you going to do? Wait until the price goes up and buy then?
The opinions expressed are those of Brad Brain, CFP, R.F.P. CLU, CH.F.C., FCSI. Brad Brain is a Senior Financial Advisor with Manulife Securities Incorporated, in Fort St John, BC. Manulife Securities Incorporated is a Member of the Canadian Investor Protection Fund. Brad Brain can be reached at [email protected] or www.bradbrainfinancial.com.
