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| Adrian Mastracci, president of fee-only KCM
Wealth Management, says "The contrarian secret is straightforward.
Buy quality investments at a discount, before everyone else
does, and hold them for a long time." |
For Immediate Release
Vancouver, BC (September 24, 2002): Conventional
wisdom reveals that many investors run to the sidelines for cover
during stock market declines. They then re-enter the investment
world when the good times return.
Adrian Mastracci, president & investment counsel
at Vancouver’s fee-only KCM Wealth Management
comments; “My experience shows that this is a great way to
adopt an unfavourable investment strategy. History confirms that
investors have been down this path several times.”
“On the other hand, contrarian wisdom happily welcomes deep
discounts,” notes Mastracci, “They are excellent prospects
to review game plans, and seek buying opportunities. Like some of
the present ones.”
“I am in the contrarian camp and it can deliver rewards,”
remarks Mastracci, “Yes, risk is ever present, but investing
is not about always being right.”
“As the frosty times unfold, a ‘sale’ tag appears
on many investments. Investors are able to buy stocks and funds
at substantial discounts. However, the sale can end abruptly with
little notice,” observes Mastracci.
“Nobody has the insight to pick market bottoms in advance,
not even the professionals,” points out Mastracci, “However,
investors with foresight to buy quality on weakness reap superior
long run rewards.”
“Investors have had at least 10 major buying opportunities,
alias bear markets, since 1945,” muses Mastracci, “October
1987 was particularly delightful! The Dow Jones index plummeted
22.7% in one day.”
“As I recall, investors have overcome and forgotten all the
past bear markets. Albeit, some were tenacious and took much longer
than anticipated,” recounts Mastracci, “Contrarians
believe the sun will also rise and shine again on this bear market.”
“Given a choice, I prefer to buy quality investments when
everyone else is dumping them and running for cover,” says
Mastracci, “If the beaten up investments make sense, they
can be excellent buys. Perhaps, even if the prices fall further.”
Here is Mastracci’s advice to wannabe contrarians:
- While the path is simple, it is far from easy. Contrarians
have the foresight to recognize buying opportunities before the
masses do.
- First, assess the current investment strategy. Engage professional
help as required, and formulate reasonable expectations in view
of personal goals.
- Next, ensure that the game plan is tuned and ready to take
part in the investment ‘sale’ as it unfolds.
- Refrain from getting fancy with the investment selections.
Buying the wide market, instead of specific sectors, is favoured.
- Avoid getting on board the investment bandwagons of the day.
They tend to fizzle out.
- Pay special attention to diversification, understand risk and
stay within the investor profile.
- Expect some investments to head south. Hence, a loss strategy
is a saviour.
“The contrarian secret is straightforward,” explains
Mastracci, “Buy quality investments at a discount, before
everyone else does, and hold them for a long time.”
“That’s it! So, let me say it again…,”
notes Mastracci, “Acquiring quality at a discount is a winning
strategy.”
“A sensible way to adopt this winning strategy is to purchase
the investments over time. There is no pressing reason to buy the
full position at once,” suggests Mastracci.
“Reacting to the markets after the fact is conventional wisdom.
It takes patience and bravery to travel the contrarian road,”
summarizes Mastracci, “However, the potential rewards are
worth it.”
“Contrarians cope with continuing market fears and uncertainties,”
concludes Mastracci, “They hold onto the wheel firmly and
focus on the horizon. Deep discounts can be magnificent buying opportunities.”
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