We all make mistakes
We all make mistakes
We tend to dismiss when we're right and really focus and agonize on the mistakes, but the mistakes just something sometimes to cherish and say how can we do it better each time? And you can do well, even though you make mistakes.
There will be errors of judgment all the time. So, that's where the value of an advisor and portfolio construction can can come into place.
You can escape it, but you can mitigate it. You can put things on your side. Warren Buffett always says his first rule of investing is don't lose money. And his second rule of investing is don't forget your first rule of investing.
What he means by that is not volatility. He means about the permanent impairment of your capital. Not the fact that one stock went down, but that the portfolio or the sum total of all of your assets continue to grow and move forward.
The importance of having a process
The importance of having a process
Alan Friedman: I work to find how is it that people make great wealth? How is it accumulated? What is the process that people through investing can feel comfortable?
[Process]
Alan Friedman: Because investing is the road less traveled. It never ends. It's a marathon.
[Marathon]
Alan Friedman: So you have to have a process that nothing works all of the time. But most of the time this will provide you with the framework that you can achieve your goals, your successes, what matters to you.
[Achieve your goals]
[Value beyond Returns
Alan Friedman
Friedman Investment Group
CIBC Wood Gundy]
It's never too early to start investing
IT'S NEVER TOO EARLY TO START INVESTING
Alan Friedman: The earlier you start, the less you need to save to be able to become really comfortable.
[Earlier you start]
Alan Friedman: A lot of people have that tomorrow, that manyana viewpoint. I'll start tomorrow, I've got to deal with these other things. But what we need to do is learn how to prioritize
[Prioritize]
Alan Friedman: and make sure that we're taking care of all of these priorities, because the essence of being a great investor is really just the power of compounding.
[Power of compounding]
Alan Friedman: That's what Einstein said. Compounding is the eighth wonder of the world. And it's so easy, just anybody who looks at the compound interest tables can see how mighty it is. And if we can only recognize it early and make small contributions one, we can get very, very wealthy. But two, once you are wealthy and thinking of retirement, you can see you still have more time than you expect.
[Retirement]
Alan Friedman: Where 30 years ago when you retired at 65, your life expectancy was 70. It's not the case anymore. We have to bring those realities in, accept the realities of the way they are, or they could come back and hurt you.
[Value beyond Returns
Alan Friedman
Friedman Investment Group
CIBC Wood Gundy]
Why Alan is so passionate about helping investors succeed
Why Alan is so passionate about helping investors succeed
[soft music playing in background]
You know, I went to university in Toronto, really didn't know what I wanted to do with my career. A good friend of mine actually went into the investment business and I started working with him. I gave him some money. It was all the money I had at the time. Right. Which wasn't a lot. But, you know, within a month, I'd lost it all. You know, not a little bit, not half of it, but I lost all of it.
It was one of those epiphany, one of those wow moments like, oh my God, whoa, you know.
This isn't how I expected it to be. It was traumatic. What transpired wasn't his fault, and I've never blamed him for it. We were good friends then, we're good friends now. What I realized is what I was doing was really speculating. It wasn't investing. But more than anything, I thought to myself, wow, I could do better than that.
[guitar playing in the background]
I treat all my clients as if it's my money because I don't want you to ever experience what I did. I know the feeling of disappointment when you invest and it doesn't work. And it inspired me really to sort of be a student and learn what works.
My name is Alan Friedman, I'm an investment advisor and portfolio manager, at CIBC Wood Gundy.
[Value beyond Returns
Alan Friedman
Friedman Investment Group
CIBC Wood Gundy]
Alan's thoughts about successful investors and their emotions
ALAN'S THOUGHTS ABOUT SUCCESSFUL INVESTORS AND THEIR EMOTIONS
Alan Friedman: Everybody believes you're making rational decisions. Nobody wants to make an irrational decision. We are preconditioned by who we are and those preconditions make us behave in certain ways.
[Decision]
Alan Friedman: We can sit here today. And I would pose questions to you and you would tell me now, oh, absolutely I'm prepared to do that.
[Critical moment]
Alan Friedman: But at that critical moment where that experience is really happening to you, you might say, I know I said that, but I take it all back. You see prices declining. You don't necessarily know the values. You hear the news, the press, it seems so dire.
[Four most important words]
Alan Friedman: They say that the four most important words never to say is this time it's different, but it's said all the time. 2008, this time was different. 1974, this time was different. Today it's different. But it's not.
[Behaviour determines success]
Alan Friedman: it's your behavior that can determine your success. There's studies that show the performance of a typical mutual fund and the performance of investors and the typical mutual fund. And the investors perform at half the return of the actual fund because they invariably buy high and sell low. When we all know the essence of the equation is to buy low, sell high. Or maybe as Mr. Buffett would say, never sell.
My job is to try to control your behavior and I can't control your behavior at that moment of crisis. The only way I can control that behavior is to have the discussions and provide the tools in the better moments to be able to make you feel better. So each time we lived through a crisis, it becomes less traumatic.
[Respectful]
That's what we do. To really recognize that we are very emotional as we deal with their money and to be truly respectful of that and to work with people to really understand their feelings about it.
[Value beyond returns
Alan Friedman
Friedman Investment Group
CIBC Wood Gundy]
Alan on mutually-beneficial Advisor/Client relationships
ALAN ON MUTUALLY-BENEFICIAL ADVISOR/CLIENT RELATIONSHIPS
[Chemistry]
Alan Friedman: The more I think about it, chemistry is vital.
When someone comes to see me, I know that all the time they're saying, is this the kind of person I can do business with? Is this the kind of person I can trust and feel good about? But I think that the reverse is also very important that for me, for the effort that we make, that I want to have that same feeling.
[That same feeling]
Alan Friedman: That I feel good about you, I feel good that you really want to work with me, that you understand the effort that I put in this work that I've done to get to this point in time.
There is a lot of miles on my odometer and a lot of experiences and a lot of things that I know through that period will help you.
[Experience]
Alan Friedman: But if we don't have the right chemistry, it's so hard. So I guess and again, it brings back that word. If we are a coalition of common interests and we need to both feel good about it, I think that's very important.
[Coalition of common interests]
Alan Friedman: And I'm very cognizant, every dollar that you pay me as a dollar that doesn't go towards your future returns.
[Align the value]
Alan Friedman: And I want to align the value of what I do with you. So I preferred charging a fee. So if we make a decision to buy something, you don't think that I'm buying it because I'm going to earn something or if I make a decision to do nothing, that it's a valid decision or if I think you should sell it that that is. But the way I can double my earnings and is only if I double your capital. So I think that working on a fee base will align our interests. And if you do well, I do well.
[If you do well]
[Value beyond Returns
Alan Friedman
Friedman Investment Group
CIBC Wood Gundy]
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