Focus on what’s happening in the present, not try to guess what might happen in the future
There’s a conundrum at the heart of successful investing. It’s impossible to predict the future with any accuracy but what happens in the future defines the value of any investment. In the end, you have to give it a go.
The key is to keep your assumptions firmly rooted in the present. So instead of thinking about how things are likely to change, you think about how they are likely to stay the same.
There’s a subtle but important difference between these two approaches, because change compounds quickly, leading you down a multitude of dark alleys, whereas the same, well, stays the same – at least until it changes.
With stocks, this means focusing less on trying to guess how things will actually turn out and more on the factors – which are apparent now, in the present – that will serve a company well whatever the future holds.
These qualitative factors must then be blended with price, which is where much of the art of investing lies: a great company can make a terrible investment if you pay too much for it.
Over the short term, the price – what people are prepared to pay – makes the most difference to an investment. But over the long term, quality comes to the fore.
So, here are five stocks we think will still be around in 20 years, having grown at least in line with the economy. Remember, though, that this is not a stock pick for now. Your aim should always be to buy great businesses at attractive prices.
1 Sydney Airport
Great businesses have protections in three main areas: they have a product that people want; they have a competitive position that allows them to deliver it without too much interference; and they have the management and culture not to stuff things up.
Denne historien er fra December 2018/January 2019-utgaven av Money Magazine Australia.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent ? Logg på
Denne historien er fra December 2018/January 2019-utgaven av Money Magazine Australia.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent? Logg på
An outrageous, beautiful monopoly
Telstra's mobile business is a cash machine with few competitors, giving it the highest returns in the world.
Drop the anchor to judge value
Buying and selling decisions should be based on where a stock price is going, not where it has been.
Powering the AI boom
Beyond the software and chipmakers, where will the energy come from?
Get into life
Tucked inside super are products that can protect you from life's inevitable uncertainties.
Paths to home ownership
Taking the road less travelled can sometimes deliver unexpected benefits.
Sold! Quick ways to add value
Small, strategic changes can have a big impact on the look and feel of your home. And get you a better price on auction day.
Money lessons the kids need to know
Your children can learn a lot from your past money mishaps. Here are eight financial conversations I have had with mine.
Property-investing rules: are they likely to change?
The pressure for the government to curb the tax benefits of tax concessions, such as negative gearing and the capital gains tax discount, is unrelenting. Most recently, independent senators David Pocock and Jacqui Lambie proposed five options for paring back investment property tax concessions, with savings to the Federal budget of up to $60 billion over the next decade.
What's love got to do with it?
A rollercoaster of emotions could be driving poor crypto behaviour.
Are we ready to be cash-free?
Saying goodbye to our piggy banks too soon could leave small businesses in the dark when problems arise.