by Tom Bradley

It’s Wimbledon time and I’m a big fan of 8-time winner, Roger Federer. He plays a beautiful game and I count myself lucky to have seen him play.

Federer has been in the news lately. He gave the commencement speech at Dartmouth. I first discovered it in the ‘A Wealth of Common Sense’ investment letter where Ben Carlson highlighted the following excerpt.

“In tennis, perfection is impossible ... In the 1,526 singles matches I played in my career, I won almost 80% of those matches ... Now, I have a question for all of you ... what percentage of the POINTS do you think I won in those matches? Only 54%.”

Yes, 54% translated into 80%, with the difference being time. Switching to investing, Ben points out that the stock market is up 52% of trading days, but over longer periods, the percentage approaches 100%. In other words, a coin toss day to day. Highly reliable when the time frame is extended.

This is a good story for individual investors. Time is an advantage you have over virtually all other types of investors. You don’t have to pass a regulatory test every three years like pension funds do or answer to impatient Boards of Directors.

There are three key benefits to having a long-term mind set.

You can ride out short-term volatility. Stocks bounce around ... a lot ... on the way to being up 100% of the time. Most of this volatility, however, is a result of investors having different time frames, not because they have different views. A day trader interprets a press release as bad news while a buy-and-hold investor sees it as one more data point on a long journey.

You can profit from periods of heightened fear and risk aversion. You don’t need to make a brilliant (and brave) market call to take advantage of bad markets. You do that when you make regular RRSP or TFSA contributions (i.e. averaging down), rebalance back to your strategic asset mix (SAM), and/or own the Founders or Builders Funds.

And you’ll be rewarded for providing liquidity. You can capture a premium return by investing in less liquid investments, or providing capital to companies and other investors when they desperately need it.

The catch, of course, is that being a disciplined long-term investor is difficult (as I’ve pointed out in previous Briefs). The eco-system around you, specifically a sales-oriented investment industry and the media, is built on reacting to short-term news which in turn creates a need to do something.

Fortunately, that’s where we come in. As I outlined at our recent Where to From Here presentation, we’re wired to stay steady and help clients run the investing gauntlet. Lately, this has meant staying widely diversified while one sector of the market — mega-cap tech — is driving performance and once again causing FOMO for investors.

Heavy stuff for a summer that’s never long enough. Enjoy the sun, and if you get a rainy day and want to talk about your portfolio, investing in general, or even tennis, we’re here for you.

I encourage you to read the rest of our Q2 Report, where we provide more details on our specific strategies and what we've been doing in each of our funds.

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