The Noah Principle
As Warren Buffett stated “Predicting Rain Doesn’t Count, Building Arks Does”. We are building Arks (investment portfolios) that will weather any storm and deliver us safely to our financial destination. We won’t let emotions steer us off course and will manage the challenges to our advantage along the way. The key objective is in having our savings grow and work for us. We work hard to accumulate savings and have paid our fair share of taxes in the process. Therefore it is essential to follow a plan that will preserve our capital and grow it over time.
“To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insight, or inside information. What’s needed is a sound intellectual framework for decisions and the ability to keep emotions from corroding that framework.” Warren Buffett
Wealth Creation and Wealth Protection begin by adhering to a time-tested proven investment philosophy.
The three cornerstones of an investment philosophy are:
- Preservation of capital – Investing with a “Margin of Safety”
- Achieving a reasonable / desired rate of return
- Minimizing taxation
These cornerstone objectives are best achieved by following proven investment methodologies. This minimizes learning curves and produces high levels of financial success and stability. By adhering to proven investment disciplines integral to first-class professional investment management, we inherently benefit from their accumulated knowledge, skill and experience. This approach brings substantial benefits to disciplined investors and greatly enhances the ability to achieve our financial goals and objectives.
Each investment is carefully considered for reasons of:
- Superior management
- A time-tested proven investment discipline
- Minimizing risk through diversification
- Investing in high quality assets
- Investments that minimize taxation
It is important to note that we do not subscribe to market timing or invest in a manner that would be considered speculative in nature. We would rather be certain of a good return than merely hopeful of a spectacular return.
Therefore we are confident that, by adhering to proven methodologies and following a sound intellectual framework to the investment process, we will uphold high quality investments with the objective of preserving capital and achieving a superior rate of return, over the long-term.
Investors today are faced with ever-changing market conditions, an often overwhelming amount of information from the media and an increasing number of investment choices. It’s not surprising that the world of investing can seem complex. Click here to learn more about five principles you can use to help you achieve success with your portfolio.
Remaining focused in today's market environment
In periods of market volatility, a look at history may offer insights into the benefits of long-term investing.
10 Key Points to Remember as an Investor
- Keep your emotions out of your investment decisions.When emotions overrule fundamentals, mistakes are often made. Benjamin Graham, Author of The Intelligent Investor and Warren Buffett’s mentor, stated: “The investor’s chief problem – and even his (or her) worst enemy – is likely to be him or herself.” It has been stated that Investor Behaviour plays more of a role to the overall rate of return one will achieve than Investment Performance. In other words, investor performance may lag when emotion or anxiety gets in the way of buying, selling or choosing the right investment. To add to that, there is enough “noise” out there (investment banter and media headlines) that can distort one’s ability to make clear investment decisions. To get the most value from your investments, it is essential to have the proper mindset, discipline and solid advice from an experience financial advisor.
- Inflation is the great risk of capital.It has also been stated that the greatest financial risk one faces in retirement is running out of capital. Inflation is a major contributor to running out of money in retirement or failing to compound money effectively, before and in retirement. A unique way to look at inflation is to ask someone who has owned a home for more than 30 years and ask them how much they paid for their first home and how much they paid for their last car. You will be surprised to learn that some people are paying as much for a car today as they paid for their first home. It is essential to choose investments that will grow capital above the rate of inflation to maintain purchasing power and grow (compound) money effectively over time.
- Be properly diversified(investing in assets with the potential for gain)…not di-worsified (choosing investments or assets that may have limited potential for gain or have run their course and have greater downside risks).
- It’s not timing the investments that count, it’s time in the investments that count.Do not try to predict the unpredictable...focus on your goals and remain committed to your investment plan. Making intelligent investment decisions at crucial points in time are also paramount to your long-term financial success.
- Investing is always about looking forward and never in the rearview mirror(looking at past performance). Many investors gravitate to the investment that has already experienced high or above-average returns. When considering “Time Value of Money” it is important to look for investments that have the potential to grow capital instead of those that may have already peaked or may have changed their course.
- If your investments drop in value , you have not suffered a loss – just a temporary decline.It is important to distinguish between investments that may experience a temporary loss of capital compared to those that may experience a permanent loss of capital. Remember, it’s easier to add or hold on when you know it’s a high quality investment. If you hold an investment and it goes down in value and you plan to sell (basic fundamentals of the investment have not changed) you may have made the wrong choice - or your investment objectives are misaligned to the investment.
- “Markets don’t lose money, people do.” ~ Nick Murray.Think of the markets (or a diversified professionally managed portfolio of high quality investments) as someone walking up a hill with a yoyo…the hill is the trend and the yoyo is the day to day, month to month, year to year moves. Although the yoyo will fluctuate over-time the trend is upwards. It is important to remain calm in the face of fluctuations also known as volatility. Buffett writes in his 1996 annual letter to shareholders that earnings gyrations “don’t bother us in the least”. He went on to write: “Charlie and I (Charlie Munger, Warren Buffett’s business partner) would much rather earn a lumpy 15% over time than a smooth 12%.”
- “If you want to know what it is like down the road, ask those coming back(people who are considered to have extensive knowledge and experience). Don’t ask those who you are walking with (friends, family and people at work with little experience).” ~ Don Connelly. Choose wisely your sources of information and the sources on which you base your decisions.
- “If you aim at nothing you will hit it with amazing accuracy.”It is important to base your criteria on sound investment principles (and philosophy) as opposed to investing aimlessly or investing with poor criteria. For example, if the main criterion for choosing an investment is based on low fees, you may not get the best return or a first-class investment manager. Fees are important to monitor, however, not at the expense of returns or quality of management. Remember, the greatest fee an investor could pay is making poor investments.
- Don’t follow the crowd!Be cautious of people, advisors, financial institutions and media who are easily swayed from their investment approach. Benjamin Graham, author of The Intelligent Investor, wrote: "The individual investor should act consistently as an investor and not as a speculator."