Focus on long-term value

Article Excerpt

Many investors think of our “stocks of the year” as sure-fire picks that are bound to be among the year’s biggest winners. Some of our past selections have lived up to that billing, but that’s not what I expect of them. Instead, I look for the best current example of my favourite type of investment, which I call a “heads-you-win-tails-you-break-even” situation. No investment comes with a true guarantee. (Government bonds guarantee you’ll get your money back, but don’t guarantee what the money will be worth.) However, a heads-you-win-tails-you-break-even pick offers very attractive odds. The idea here is that you won’t lose much if the investment proves disappointing, which is a constant risk in investing. But if things work in your favour—as often happens with our recommendations—the return can be substantial. We also think it’s important for investors to build a diversified portfolio rather than focus on a single stock of the year. That’s particularly important during the current environment of rising market volatility…

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