Nick Murray... Words of Wisdom

Stocks Vs. Bonds:

The most important thing is: did you invest relentlessly in any stock funds as opposed to any bond funds, individual bonds or CD’s. The Megatruth is: real wealth come to, and abides with, the owners of great companies, not to the lenders to great companies. I’m not suggesting that an owner can’t lose; I’m declaring as an article of faith that a loaner can’t win.

If you steadily accumulate even mundane stocks month after month and year after year, if you patiently remain true to your tortoise disciplines even when hares go whizzing past you left and right, and above all if you regard “bear markets” as opportunities to buy more of your stocks at sale prices rather than as the onset of Armageddon – you’ll not only achieve wealth, you’ll probably “outperform” 90% of your fellow investors without even trying.

Thus, a huge percentage of your total lifetime return is attributable to the simple decision to be an owner and not a loaner. And most of the rest of your return depends not on how your stocks perform vs. their peers, but on how you behave. Wealth isn’t primarily determined by investment performance, but by investor behaviour.

Equities neither make you wealthy nor keep you wealthy. You have to do those things yourself. You can’t, as we’ve seen, build and hold wealth without equities. But the converse is even more importantly true: equities can’t do it without you. Your appropriate behaviour with respect to equity investments – and not the relative “performance” of those investments – is the variable that will govern your financial success. (And in the end, your behaviour is the only thing you can ever really control.)
The single most important variable in the quest for equity investment success is also the only variable you ultimately control: you own behaviour.

Four Behavioural Tactics to Success:
1. Setting goals in dollar-specific, date- specific terms.
2. Establishing a plan for achieving those goals, assuming a specific rate (or rates) of return.
3. Investing the same dollar amounts at regular intervals, so as to harness the power of dollar-cost averaging.
4. Meeting your retirement income needs via systematic withdrawal from your equity portfolio.