Around The World in 100 Words - August 2018; Week 31
This week Around The World (ATW) looks at stock market valuations, using the topical example of cannabis stocks to make one simple point when it comes to investing: don’t overpay when investing in securities. Whether it be cannabis producers or the largest of blue chip companies, investors who overpay for a stock are acquiring an asset unsupported by fundamentals.
Way back in the early 2000s, investors who bought shares of Microsoft -then the world’s most valuable company, overpaid for their shares and saw their investment trade sideways for over a decade earning them a whopping 0% return during this time period. A lost decade is hardly what investors are looking for, yet they continue to speculate on investments without consideration to valuations. The link to the Globe & Mail article highlights the refer-madness (pun intended) when it comes to cannabis stocks, making the conclusion that investors are about to get slaughtered. https://www.theglobeandmail.com/business/rob-magazine/article-are-investors-in-for-a-rough-ride-with-pot-stocks/
Our approach to Wealth Management is based on fundamentals and we conduct rigorous due-diligence on the institutional investors we partner with when building client portfolios. The inclusion of EdgePoint and Dimensional in our asset allocation models, ensures your money is being invested wisely, not speculatively.
Building and preserving wealth for our clients is our mission-critical undertaking, and what our clients hold in their portfolios underscore this. As does what client’s don’t hold -including hot-sectors or industries which resemble casinos more than capital markets.
Hope you’re having a great summer and tune in next week for the latest ATW blog!