Tom Bradley, co-founder, chairman and chief investment officer at Steadyhand Investment Funds Inc. in Vancouver.Courtesy of manufacturer
Tom Bradley is co-founder of Steadyhand Investment Management, a member of the Investment Hall of Fame and a champion of timeless investment principles.
I recently met with a friend to talk about investing. He’d just won the Grade 9 investment game at school (bitcoin, bitcoin, and more bitcoin) and was enthusiastic to learn more. He wanted to get started for real.
I struggle with these conversations because our goals are different. He wants to have fun and get rich, and I want him to learn some basics he can use for the rest of his life. As any parent knows, this is a big valley to bridge.
It’s a dilemma I think about constantly. A book publisher once said to me, “The problem you have, Tom, is that you’re asking people to eat their broccoli.” In other words, my approach to investing is fundamental and it works, but it’s boring. It pales in comparison to the sizzle of a steak or the crunch of a French fry. It’s not cool doing nothing when everyone else is urgently doing something. And I’m not giving people anything to talk about at a dinner party.
My new business partner, Som Seif, put it more positively than the publisher. He said, “Tom, not every successful investor does what you preach, but every investor who does is successful.”
Clearly, I need to try a new communication strategy.
Broccoli
Maybe I can build on the broccoli thing. People are really into health these days and broccoli is one of 25 superfoods. Eat it regularly and you’ll be healthier.
So, I could say you don’t get to have dessert until you’ve eaten your vegetables. Prior to getting started, you must have a plan that includes a clear goal of what you’re trying to achieve, a framework or target asset mix to guide how you allocate your dollars, and an understanding of how unpredictable markets are.
I like broccoli but it doesn’t seem like this will sell unless I can follow my mother’s lead and smother it with cheese sauce.
Layups vs. launching threes
What about sports analogies? They’re right in my wheelhouse. How about I say investors need to learn layups and bounce passes before they start launching threes? Or golf. They need to develop some scoring skills by learning to chip and putt before whaling on a driver.
In other words, before opening a brokerage account and trading stocks and options on your phone, you need to know that stocks are driven by profits in the long term and a random array of ever-changing factors in the short term. Stock markets rise over time, and you need to be there when they do. The way to reliably make money is to maximize the time invested. Day trading is, well, like throwing darts blindfolded.
Yeah, but sinking a three is such a great feeling.
Bragging rights
Maybe I can play to investors’ most visceral emotion – doing better than their friends and enemies. It fuelled Instagram to great heights. Why can’t it do the same for the ABCs of investing?
If you take care of the basics and develop a regular routine (make monthly contributions, read the quarterly reports, do a complete review annually), you’ll meet your goals and beat most, if not all, of your colleagues and neighbours. No extensive market knowledge required, nor any insight into whether Telus or RBC is a better buy. In fact, no brilliance necessary at all, just a healthy dollop of discipline.
And on the way to bragging rights, there’s two added bonuses. You’ll spend far less time on investing, and you’ll ooze confidence when talking about it. You may even be a little smug.
Well, emotion feels like a better hook than broccoli, but I’m not sure I’m there yet.
Social hype machine
Clearly, I’ve got to penetrate the social media machine. To do that, I need to create some buzz, hype even. Perhaps I can recast the basics in terms of what people are used to seeing and clicking on.
- You’ll triple your money.
- You’re guaranteed to never miss a bull market.
- You’ll achieve your goals and have financial flexibility in retirement.
- You’ll do better than your obnoxious brother-in-law who follows the market and talks a big game.
- You’ll have time to read five more books each year.
Now I’m getting somewhere but unfortunately, I’m meeting with my young friend again next week. I guess I’ll just tell him, “Eat your broccoli, kid.”