If you want to win, you have to be good on defence, writes Peter Watson.
As the Toronto Maple Leafs head into the Stanley Cup playoffs, we understand they have the firepower to score goals. Keeping the puck out of their net will be the key to victory.
Like hockey and the glamour of scoring goals, with investing the glamour is making big gains.
The key to successful investing is to be defensive.
Diversification is the starting point. You do not know how the future will turn out. Therefore, avoiding having too much money invested in any one investment means that you are being defensive.
If you are a long-term investor and your circumstances allow, try to maintain that long-term approach. Changing your investment strategy after a sudden unexpected decline in value of investments is far too common and is very costly.
The Maple Leafs have not won the Stanley Cup since 1967. And it seems like forever since they have even won just one playoff series.
For those that follow hockey, every time you hear how important defence is, think of your own investment account.
Having losses in your investments is much more discouraging than having a gain of an equal amount. Losing money encourages people to abandon investments and leave their money in an extremely low interest-paying bank account.
Playing defence in hockey or any other sport is a critical component of winning. Playing defence when it comes to your own personal investing is also your key to success.
Best of luck with your investments and Go Leafs Go!
Peter Watson is registered with Aligned Capital Partners Inc. (ACPI) to provide investment advice. Investment products are provided by ACPI. ACPI is a member of the Investment Industry Regulatory Organization of Canada. The opinions expressed are those of the author and not necessarily those of ACPI. Only investment-related products and services are offered through Watson Securities of ACPI. Peter Watson provides wealth management services through Watson Investments. He can be reached at www.watsoninvestments.com
