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22 December 2015
Unless you’ve been living under a rock the last few weeks, you’ll be fully aware of one of the worlds most famous movie ‘Trilogies’ releasing a new saga that appears to be breaking every box office record there is.
Of course, we are not discussing a galaxy far, far away here, but we do have the third and final part in our own ‘Trilogy’ interview with Wayne Collins, Co-Founder of CSS Investments, on his 25 years in the stock market.
This interview has carried a theme throughout about the importance of using others experience to fast track your understanding of the markets. To further tie in the whole Star Wars theme, it’s kind of like Luke Skywalker trying to master The Force without the help of Obi Wan or Yoda.
Having someone on your side, encouraging and mentoring you is so important in almost any area of life that you are trying to make positive progress in. Investing is no different.
So read on to understand how you can use this idea to further develop your investing knowledge and understanding.
And may the Force be with you…
Wayne: I’d tell anyone who wants to get involved in the markets that before you do, it is a fundamental necessity to understand what you’re trying to achieve and why.
Then create a plan, strategy or set of rules and stick to it. What I find when I tell people that is they get nervous or just dismiss this as too simple.
They have a fear of missing out on something else, or think there’s some other ‘big secret’. There’s not, don’t buy it.
Others tell me that it sounds boring. Well, that’s because it is.
What is rarely understood is that being a successful investor, trader, speculator or anything to do with the markets, it is boring. That doesn’t mean it won’t work.
I think I started by saying that investing is simple, but not easy. That’s because you spend as much time fighting yourself and your head as much as trying to understand the markets.
I often ask people; ’what do they really want?’ Excitement, variety or to create wealth?
Don’t look to the stock market for the first two if you want to build wealth. Get another hobby to satisfy these.
The other thing to remember is just because you create a plan, it doesn’t mean that you can’t periodically review it, adjust it or improve it.
But understand that if you are changing your plan you should be able to rationalise why you are doing it.
You may want to adjust your objectives based on a change in circumstance; you may receive a windfall or need to take some money out.
Just don’t change it because you’re bored, especially if it’s producing steady returns, or you’re going through a bad patch.
There’s nothing worse than abandoning a solid strategy during a natural negative cycle, only to see it turn round days or months later and you’re not involved.
Wayne: I think I like anything in life, people need advice at a different times. So I would look to speak with a professional and talk through what you are trying to achieve, if nothing else just to get a second opinion.
Of course I’m bias, but I’ve seen the damage done to accounts by people that stubbornly pursue an approach based on bad strategy, or even none at all. By the time they realise and come to me, it’s often too late.
If you do decide to work with someone I can’t stress enough how important the quality of the relationship you have is key to success.
It’s a two way thing.
Understand that brokers like everyone else are human and occasionally they will miss things.
Please don’t ever give your account to a broker if you’re expecting a 100% guarantee that you will make a specific amount of money. It doesn’t exist in the stock market, no matter what anyone tells you.
And don’t give any professional money if you believe that it makes you immune to responsibility either, it doesn’t.
The important word that people often miss when going to a professional is ‘advice’. As an investor, unless you’re in passive funds, you still maintain the last word and the final decision will always lie with you.
If you decide to work with someone, always do your research on a company and individual before you work with them. If you skip this and they don’t work out for you, then harsh as it sounds, you can only blame yourself.
This is different if you do make the effort to do that research, you like what you find, but then you’re given advice that’s not in your best interest. That’s why you should always go with an FCA regulated company. It’s the nearest thing you’ll ever get to a “guarantee” as if you are advised against your best interests, you have the protection of the FCA.
I do believe when you find a good professional and build a relationship with them that it will give you a better chance than just following a tipster or newspapers.
It’s certainly a lot less lonely and having someone who is effectively holding you accountable can at critical times, save you from yourself.
Wayne: One of the misunderstood benefits when working with a professional is that these guys live and breathe the markets, they study them every day, study and pass industry exams and they get to confer with and learn from the experience of the more senior guy’s.
I know that all sounds like a plug or pitch for CSS, but it really isn’t.
I’m not suggesting everyone reading this to should open an account. If you’re thinking about it, you should do your research on a number of potential companies and choose the one that best suits your needs.
If that turns out to be CSS at some point, great, we’ll be here to help. But if you’re better suited elsewhere that’s also great. It’s arrogant to believe we’re the right fit for everyone.
I’d rather clients were getting the support they need and that are successful. Both because I want people to make money in the markets to fund whatever dreams they have, and also as it’s a positive reflection on the industry as a whole.
Everyone wins that way.
Maybe it’s because I’ve been around for a while now and seen almost every type of market condition, but I believe that one thing you can’t learn from a tipster, the internet or the media is experience. And none of these talk back to you either if you have questions.
You can’t take away experience, and in my mind it is one of the key aspects in terms of helping anyone to get some sort of successful outcome from investing, trading, speculation or any combination of all three, whatever that may look like for each individual.
So there you go. An insight into 25 years in the markets from Wayne’s point of view.
Whilst you may not agree with everything he says, I hope you’ve managed to pick out some real nuggets of wisdom in what he said as it comes with plenty of battle scars! It’s worth reading a few times as I found that I learned something new each time I went through this myself.
All that’s left is for me to wish you a very merry Christmas and a prosperous New Year!