Andrew Page

I have been an active share investor for over a decade now, and I have yet to make any meaningful return from the market. In fact, I don't actually rely on the market to provide me with a return, and don't expect one for a long while yet, if ever. And yet, I continue to buy stocks on a regular basis. Either I am a sucker for punishment, or there is something else going on.

While the direst predictions over the world economy have failed to pass, it is nevertheless a fact that many of us did it tough, and in fact are still doing it tough today. But outside of losing a job any pain was most likely, to a large extent at least, self inflicted. That’s a little harsh, but the truth isn’t always nice.

Given the apparent devastation that resulted from the Global Financial Crisis, a casual observer would be forgiven for thinking that stock market investors are still licking their wounds. After all, the Australian market more than halved in value between Late 2007 and early 2009 and still remains a good 25% below its all time high. Fortunes have been lost and, according to the popular media, the hopes and dreams of the soon to be retired baby boomers have gone up in smoke.

Experience has repeatedly taught me to be wary of ‘hot tips’, especially when they concern unproven speculative enterprises. In an efficient market one must be careful not to forget that by the time you have received the tip, so have a thousand others and the expectation will most often already be reflected in the market price. This is especially relevant for those concerned only with short term gains.