Lighthouse is running a two-week-long series in which we share some of our principles of investment. All you need is an open mind and a few minutes each day. You can keep tabs on the action at the Principles of Investment index.
In this day and age it is all too easy to get blinded by the complexities of the market-place and the global economy. Media sensationalism certainly doesn’t help us either. Investment managers and advisers can also just as easily get lost or blinded in technical data and analysis as they try and navigate their clients through these hurricanes and monsoons.
In my mind, the principles of investment haven’t really changed much over the 20+ years I have been in the business. What has changed (aside from my accelerating hair loss) is that many investors do seem to have lost sight of some of the simple principles – dare I say even ‘old-fashioned’ principles, and gotten themselves caught up in technical analysis, the sensational media headlines, together with risk/reward expectations that are now unrealistic (and perhaps always were). This is not to say that the global economic circumstances are not real… but how much of it is just wind, rain and thunder… and how much of is actual lightening?
Given the economic and stock-market turmoil this past year or more, many Lighthouse clients are quite surprised to see that their investment accounts are doing very well. Even those very few clients who are still ‘in the red’ are only marginally in the red, which is still quite good, considering that the DJIA is around -30% and the FTSE -25% from where it was not so long ago.
With this in mind, I thought it would be appropriate to share with you some answers as to “why” our clients are doing so well. Of course, I would love to be able to say this is because Lighthouse is so ‘brilliant and wonderful’, and while this might even be true [tongue in cheek], this is not the reason ‘why’.
In simple and very brief terms, “Why” our clients are doing so well is, firstly because they each know: where they are; where they want to go; the reason for their journey; and the manner by which they prefer to make that journey. And secondly, we at Lighthouse thoroughly explored these ‘4-Dimensions’ with each client to ensure we provided them the right ship and laid the right course by which to navigate through the storms and sunny days on their journey.
These seem very obvious requirements to have in mind before setting sail. Sadly, very few people actually see the value in thoroughly exploring these questions until long after they have set sail, or after they run aground. Commonly, most investors focus their questions on their destination, and superficially examine the other three dimensions. Yet these other three dimensions directly determine whether you do even reach your destination.
This 4-Dimensional exploratory approach naturally does require more time and effort by the financial adviser. But this is what Lighthouse does each time, and the results justify us making that extra effort. Just ask one of our many clients.
If you would like to see more detailed explanations of the above, these are posted on our website blog in sections for your convenience. My explanations will, for some of you, be over-simplistic, and even a little ‘vague’ in some regards. My purpose here is to strip away all the marketing slogans, rhetoric, media-headlines, and technical jargon, to take you back to ‘ground zero’ and revisit some very basic (’softer’) principles about investment in their very raw form.
On Wednesday, we’ll start looking at Part 1 – Exploration. If you liked this article and wish to see “How” we deliver this for our clients, do give us a buzz, we can arrange a personal introductory discussion with one of our consultant; after-all, this is the point of this blog, helping you 
