Mawer Blog

Should we take our profits now?

Next to my desk I have a research report, yellowed with age from February 2, 1988. It’s title: “A Rationale for the Japanese Market’s High Valuation.” The research report goes on for nine pages rationalizing why the Japanese index, trading at a multiple of 56 times earnings, was reasonably priced and that investors should buy. Now some might say the report was right, because had you held the Nikkei index from that day until the end of 1989, you would have been up 64.4%. However, had you held the index from that same day to the beginning of 2013, you would have lost 70% of your capital.

It stands for that which is pure, time tested, and reliable.

From our latest Investment Newsletter...

It's been an ugly few weeks for gold investors.

Bigger isn't always better...

A friend called me several years ago seeking advice. He had invested $100,000 into a mutual fund and within months he had lost almost 20% of his money. Our conversation then, and the events that have since transpired, illustrate the perils of anchoring - a behavioural finance term that can trap any investor. Here’s what happened.

There’s a significant cohort of the investment community which suggests that the best approach to investing is to focus on a company’s historical data.

I travelled to Cyprus about ten years ago. It’s about twice the size of Prince Edward Island and home to approximately one million people. Life seemed simple in Cyprus. Food was fresh and the Mediterranean views were spectacular. From what I could gather, tourism and agriculture were the primary means to earn a living. Playing chess or dominoes were popular ways to spend the evenings. I haven’t heard much about Cyprus in the last 10 years…until the last week. What happened?

The broad range of self-imposed spending cuts that were thrust on the U.S. federal government, widely known as sequestration, became a topic of great concern over the past few months. As such, when Congress failed to come to an agreement to avert the sequestration cuts, one might have expected chaos in the streets.