Ask Colin

A friend gave up dairy farming to invest in shares, buying low PE and high dividend yield stocks. I also bought some, but my choices did not perform. Will your seminar tell me what I was doing wrong?

The value approach does work. However, I think it needs a technical analysis filter. I teach this in my seminar. It also does not work well at the top of a bull market. There has been a lot in the press about value managers falling behind in the last two years. However, over all market cycles they do well.

I think now is the time, because if you are in the market you should be in defensive mode. One way to be defensive is to buy only stocks that are cheap. You portfolio may still go down in a bear market, but not as much as the growth stocks.

The other thing the value approach needs is patience. Then more patience than most people have. It sounds like you dairy farmer friend has it. On this point a quotation for you:

If I wanted to become a tramp I would seek information and advice from the most successful tramp I could find. If I wanted to become a failure, I would seek advice from men who had never succeeded. If I wanted to succeed in all things, I would look around me for those who are succeeding and do as they have done.

- Joseph Marshall Wade

Perhaps you should ask your friend to teach you.