The Best Strategy For 2015

It is the start of another year, which, for some of us, could mean the beginning of something new and exciting.

Yes, it is that time of the year when we rack our brains to come up with some meaningful New Year resolutions that will, hopefully, change our lives appreciably.

I have, however, for a long while, been a silent campaigner against New Year resolutions. Or to put it bluntly, I never bother to make any. I have never quite understood why I would want to wait until 1 January to start doing something significant, when starting straight away would be much more sensible.

Sourpuss or pussycat?

Why, for example, would some people wait until 1 January to resolve to be less grumpy? Does something miraculous happen on the first day of the New Year that transforms a sourpuss into a pussycat?

Why also, would anyone in serious debt believe that 1 January is a good time to start doing something about their crippling loans? If debt is ruining your life, then wouldn’t any time of year be a good time to start whittling it down?

Meanwhile, some people, it seems, like to use the start of the calendar year to formulate new investing strategies. How, they want to know, should they be investing in 2015?

The seemingly harmless question, however, implies that events happen in convenient blocks of 12 months, such as 2012, 2013 or 2014 etc. Things don’t happen like that. And it is only with the benefit of hindsight that we know what has actually happened in a given year.

Fanciful notion

Investments, we should remember, are incapable of feelings. They don’t have memories nor do they have any concept of the Gregorian calendar.

Additionally, a stock doesn’t know that you own it. You might have developed strong feelings for it but it feels nothing for you in return. Nor does it know what price you paid for it or when you bought it.

Investors, therefore, need to stop thinking about what might happen over the course of one year. More importantly, they need to abandon the fanciful notion of a timeframe that begins on 1 January and ends on the 31 December.

Investments, you see, are not so accommodating as to start performing at the beginning of the year and stop on the last day of the same year. It would, indeed, be very convenient if they could pull off such a fantastic feat.

Changes afoot

The cute idea that a particular series of events rules a particular year is totally fallacious. Nevertheless, some experts like to imply that this is how markets work. They suggest that profits can be made by changing strategies on the first day of every calendar year.

That said, some very skilled people can profit by making timely adjustments to their investing strategy. They can sense that changes might be afoot and appear to know the right time to alter course.

But their decisions are not governed by calendar years. Nor are they likely to share their expertise with you and me.

The horrible trap

For most of us, though, we neither have the skill nor the talent to profit from regular strategy changes. What’s more, if we try we are likely to fall into the horrible trap of buying and selling at precisely the wrong time.

For the majority of us, it would be much better to find a long-term strategy, which, if followed continually, will work whatever the market conditions.

Admittedly, there will be the inescapable fluctuations that could impact any single-strategy approach. But the secret is to stick with the plan, especially through the rough patches.

If you desperately feel the urge to make a New Year resolution this year, then resolve to resist changing strategies frequently.

If you are an income investor, then try to be as expert as you can in that field. That means knowing as much as possible about perennial outperformers such as Jardine Matheson Holdings (SGX: J36), SingTel (SGX: Z74) and ComfortDelGro (SGX: C52). I do. Do you?

A version of this article first appeared in Take Stock Singapore.

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