Are cheap shares potentially great investments? Maybe. But I’d consider a few points first.
For example, the investment website The Motley Fool UK has come a long way since when I first discovered it around 1999.
Back then, one of the main themes was to aim to stuff a portfolio with so-called “obviously great investments”.
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But just like other walks of life, things evolve. And The Motley Fool has earned a reputation for practising and encouraging the concept of continual professional development for private investors.
Evolving process
Indeed, it would be foolish (lower case ‘f’) to turn one’s back on continuous learning. For example, almost every day I find out something about my investing and feed it back into my process to make it as fine-tuned as possible.
Ever since the internet arrived, the knowledge-sharing and growth of collective wisdom in the investment community has been staggering.
And now, it’s well-known that all stock investments carry risks as well as the potential to make private investors wealthy (but only if we pick the right ones).
However, not many folk know how to pick the right ones when they start running their own money – I thought I did, but I was wrong.
Luckily, I signed up to one of the Fool’s stock-picking and educational services in my first year or two. And the education part of the deal proved to be invaluable – it accelerated my learning journey, no question about that.
And the move was one of my best-ever investments. It’s right up there with paying off my mortgage with my first lump sum to invest.
Nurturing an investment strategy
But everyone will have their own investment road to travel. And routes to success can be as varied as the strategies that can be successful. In fact, no two strategies employed by private investors are likely to be exactly the same in every respect. And that’s just how it should be.
Just like a person’s career — nurtured over decades — a personal investment strategy is a living, breathing and evolving thing.
American writer, attorney and prose poet Max Ehrmann probably said it best in his 1927 work Desiderata: “Enjoy your achievements as well as your plans. Keep interested in your own career, however humble, it is a real possession in the changing fortunes of time.”
Career, yes, but I’d substitute ‘investment strategy’ into the text as well, as it’s equally precious. And it’s a thing that has likely taken time and sacrifice to curate over many years before it becomes consistently successful.
But Desiderata contains some more sobering advice applicable to investors.
For example: “Avoid loud and aggressive persons, they are vexatious to the spirit.” And I’d avoid profitless, jam-tomorrow businesses that the bulletin boards are all shouting about.
Then there’s: “If you compare yourself to others, you may become vain and bitter, for always there will be greater and lesser persons than yourself.” For that one, I’m thinking of the flurry of portfolio reviews private investors tend to post all over the internet every January.
Indeed, it’s not all about beating others, it not even about thrashing a benchmark index. It’s really all about making money consistently over time and eventually getting back much more than we at first put in.
