From the Gowdie Family Wealth (AUSTRALIA) –
Once-in-a-lifetime opportunities are never as rare as they are promoted to be.
How many have you been presented with in your lifetime? Personally, I’ve lost count of the number of never-to-be repeated opportunities I’ve come across.
Genuine once-in-a-lifetime opportunities are never put on billboards, newspaper ads or told to you by the bloke next door.
Real bargains are usually the result of carnage. Buying something when hardly anyone else wants it is a true opportunity. However, we (as in the majority) are not wired to buy low and sell high. We tend to like the comfort of the herd for reassurance.
Countless money flow studies (looking at the flow of money into and out of managed funds) show the herd buys high and sells low. It is a well-established pattern.
Recovering losses takes time. This is time that could’ve been spent advancing your financial situation, rather than trying to recoup lost capital.
As the custodians of our family wealth we have a responsibility to protect and promote (in that order) our capital.
Without the benefit of perfect timing, the best way to implement the ‘protect and promote’ strategy is to buy assets at a discount and sell when they are at a premium. However, discounted assets can become deeply discounted and premiums can extend to being seriously overvalued. So how do we manage to enter and exit markets that can move to extremes?
With dollar cost averaging.