lanager preaches piain common sense

1 WAS recently fortunate to get a ticket to hear Peter Lynch speak at the Queen Elizabeth Theatre in Vancouver.

For those who have not heard of Lynch, he was the manager of the most successful mutual fund ia the world, the Fidelity Investments Magellan Fund.

The ideas and thoughts that he presented at this seminar were much different from what you would expect trom a manager with his skills and record. {| wanted to give you the opponunity to benefit from his knowledge and insight.

His first point was: Investors should know what they are invest-_ ing in.

Lynch emphasizes the need for investors to have a true understand- ing of the investments they are making, the business they are buy- ing part of.

T often recommend to clients

66 Peter Lynch’s talk was enlightening because he refreshed the idea that investors need not be experts at portfolio management. 99

that if they examine the clothes their children are wearing, the com-

. puter software they buy, the cars on the road or the restaurants that are always full, they can get a good idea of the best investments to make.

Peter emphasized that if you can’t understand or don’t know what it is you're investing in, you shouldn't do so until you find out. We can apply this principle to’

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Russell Moldowan

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THE BOTTOM LINE

almost any investnent, mutual funds or GICs. That is why it is important that would-be investors always read the prospectus of the mutual fund.

Lynch's next point was that over the Jong-term, interest rates, the economy and stock markets can be predicted. If anyone tells you that they know what will happen next week, month or year — good luck. Sometimes as investors we have long-term goals but we often want to satisfy ther with a short-term strategy.

Choosing investments with an eye to maximizing investment returns over the long-term will bet- ter match objectives with oppartu- nities.

The next point Lynch made is that investors have plenty of time. Look before you leap. [fan invest- ment is attractive now, it should still be attractive tomorrow or next week.

A true long-term, conservative, growth-oriented approach would easiiy support this idea. Peter has followed some stocks for weeks or months to get a feel for them before making a move.

Lynch's 10 most dangerous things that investors say about stocks:

@ “if it's gone down this much already, it can’t go much lower.”

100% equity tinancing available (QAC)

Weel it's gone this high already,

how can il possibly go higher?”

“Eventually, they always cone

back.”

vies $3; what can Pose?"

@ wits always darkest before the

dawn,”

M@ “When it rebounds to $10, Pit

sell."

BvWhat, me worry? Conservative

stocks don’t Muctuate,”

“Look atall the money Pve lost:

I didn't buy it.”

Bl missed that one. TH catch up

the next one.”

@ °The stock has gone up — so |

must be right.” or “The stock his

gi s st be wrong.” “Avoid the long shots,” he says.

‘Why be greedy and risk it all fora

quick gain?

Lynch also stressed the impor- tance of good management, either trom a fund manager, or from your investment adviser.

Allin all, Peter Lynch's talk was enlightening because he refreshed the idea that investors need not be experts at portfolio management. Rather, with the help of an invest- ment adviser, choosing and manag- ing investments can be successful.

Consistency and common sense produce good results; we need only Jook at all that is around us, read the newspaper and pay attention to how the world is changing.

It was suggested to me a few years ago that investing is really just gathering pieces of companies that are worth owning; The rest is elementary. As Peter pointed out, on average corporate profits double every 10 years: so should your investment.

The Bottom Line is: Prudent management, long-term goals, investment advice and a balanced mix will help you achieve the goals that you have set.

Russell Moldowan is an invest- ment adviser in Vancouver. He advises on investment management and retirement planning. Call or write to Russell at (604) 661-7475, P.O. Box 10342, Pacific Centre, Vancouver, B.C, V7Y 1H6. Or by E-mail at russellm @unixy.ube.ca.

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