Talks with an Investment Manager: Tips for Investing in 2020
Did financial goals make your 2020 resolutions list? When it comes to growing wealth, investing is one of the most tried-and-true methods, but knowing where and how to invest is tricky. So, we asked Sean Miller of Miller Asset Solutions in Charlottesville to share some insight into the practice.
“There is no secret to investing (this is the secret). It really comes down to not making a great deal of investment errors coupled with investing in good companies. That’s It … 100 percent,” says Miller. “That could be the whole article—don’t screw up and invest in companies that do well (or even moderately well). It is simple to say but difficult to practice and implement.”
When investing, Miller recommends keeping the following points in mind:
- Investment models will only get you so far and will often mislead you. The more complex the investment model/spreadsheet, the more likely you are to lose money. Analysts and investors often get lost in the micro details when it is the big picture that truly matters.
- It is better to be approximately right, rather than precisely wrong when making investment decisions. Making decisions with less than perfect knowledge is often necessary, and you are often rewarded for bearing the risk of uncertainty. It is impossible to know everything about a security, so do the best with your current knowledge and experience.
- No investment points are awarded for difficulty or complexity. Simple strategies can lead to outstanding returns.
- The success of indexing is evidence that the most simple investment approach can be successful and profitable.
- Or, you invest in a well diversified company like Corning (GLW – one of my favorites) that does well in three different areas: technology (Gorilla Glass), automotive (catalytic converters and filters) and science (specialized glass and filters).
- Finally, it is perfectly acceptable to avoid securities you do not understand. Many famed investors like Warren Buffett call this putting investments in the “too hard” pile, and it has saved them both money and mental anguish.
“The point is: investing is simple but not thoughtless. One must commit to making investing simple by NOT making overly complex investment models and avoiding investments they do not understand,” adds Miller. “Complexity is often used as a sales tool by banks and investment managers where they show off “the better investment mousetrap” via the use of leverage or complicated investment products. My experience is that the simple approach always outperforms the complex when thoughtfully implemented.”
You can also find more investment and financial insight in previous posts from our informative series with Miller. Just search for “Talks with an Investment Manager” in the blog’s search bar. For more information on Miller and Miller Asset Solutions, LLC, you can visit his website.
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