#9 All Good Trends Must Come to an End
An old market saying is "the trend is your friend." At Mawer Investment Management Ltd, we know better. We know that trends always end.
The "trend is your friend" argument assumes that today's hot performer will be tomorrow's hot performer. This works until it doesn't work. This is true not only for individual stocks, but also for sectors and overall markets.
The other danger with following the trend is that you get involved in companies or areas that are outside your expertise. Remember what your mom said, "Just because the other kids are jumping off a bridge, should you?"
More recently, the trend was U.S. real estate. Real estate can only go up, right? They're not making any more of it you know! Of course this trend ended badly as well.
The alternative investment approach practiced at Mawer is to invest in companies that generate wealth and are priced at a discount to their 'true' value. This approach does not rely on trends to work.
If you would like to learn more about how we manage money, please contact our office toll-free at (888) 549-6248, and ask to speak to a Portfolio Manager, or email us for an information package.