Nine practical tips to make you a more successful investor in 2022

Buy Hold Sell

Livewire Markets

Investors are always at risk of losing sight of the big picture. It's easy to become preoccupied with distracting detail at the expense of good judgement.

This can pay off every now and again – broken clocks tell the time twice a day, as the saying goes - but it doesn’t constitute intelligent investing over the long term.

In other words: don’t take shortcuts when investing. This is especially the case now. High valuations, the prospect of inflation, and rising interest rates mean that winners may be increasingly difficult to come by.

In keeping with our mission of helping you make more successful investing decisions, we asked 9 fundies to share the one tip that will give you an edge on your journey in 2022.

Click on the player to watch the video or read an edited transcript below.

Note: This vision was shot on the 8th and 14th of December 2021. 

 

#1 Remove emotion

Expert: Dean Fergie, Cyan Investment Management

I think you need to be really methodical and take the emotion out of your investing. You're doing it for practical reasons. You can't let your own feelings take control of what a bad decision. So that's my sort of number one tip, just be really methodical and have some humility as well.

#2 Be nimble

Expert: Richard Ivers, Prime Value

I think to be open-minded and willing to evolve and adapt to the change because we're seeing that in the last couple of years, there's been massive change and you can't be too firm or fixed in your views. I think you've got to be willing to adjust as the situation arises. And I think there's probably going to be more of that we're seeing it with omicron recently.

I think you can be nimble within your own strategy. So you have got to know what you're good at and stay to that. 

And I think going outside that is dangerous, but in terms of the businesses that you own and the assumptions behind why you own them, I think you've got to adjust and adapt to the changing environment.

#3 Do the work

Expert: Mark Landau, L1 Capital

The thing that I think most retail investors should focus on is doing the work. 

If you do the work, you're less likely to make a mistake. 

You're not to going to invest based on opinion and quickly change your mind if the situation changes, but also you're more likely to stick to your guns. So if the share price falls or if the market has a wobble, you won't capitulate and sell at the wrong time. So I find when you do the work, you make better decisions and you also don't make bad trading decisions too.

#4 Beware the IPO market

Expert: Steve Black, Pengana Capital

I think it'd be wise to be wary of the IPO market. 

There's the real risk of people being caught up in the moment or the thrill of the chase and wanting to be involved for no other reason than it's a hot story. 

That for us seems somewhat dangerous and not necessarily fundamental to how one should invest. Part of a recent roadshow I conducted, we did some work on looking at how IPOs have performed over the last four years and it's somewhat selective, but there was 90 companies that are in our investible universe, small industrial stocks that have necessary liquidity for us to invest in them. And of those 90, the median gain was only 5% over four years. Now that as a cohort and a strong rising market, that's a pretty disappointing outcome.

#5 Numbers over narrative

Expert: Chad Padowitz, Talaria Asset Management

I think one of the very important things and it's very relevant at the moment is to use numbers over narrative, to not get caught into stock stories, themes, if the numbers and the fundamentals don't stack up, you are putting yourself in a very dangerous place to invest. And we've seen that in the meme stocks as an example.

#6 Think long-term

Expert: Michael Steele, Yarra Capital Management

Key tip to be a better investor in 2022 is to think longer term. Invest for the longer term. So to invest for three plus years, rather than under 12 months. When you look in the market at the moment, there seems like a lot of short term momentum based trading. So people just buying based on short term factors and you see that in the short term holding periods of both retail and institutional investors as well.

#7 Run winners, cut losers

Expert: Nick Griffin, Munro Partners

It's the same piece of advice we always give. You got to run your winners and you got to cut your losers. The reality is the equity market is a lot of fun and it's lots of fun because it's got great management teams trying to solve big problems. The reality is only a few of them actually succeed. There's only one Apple. There's only one Amazon. There's only been one Google. Along the way you're going to make mistakes. It's inevitable. It's mathematically impossible to get them all right straight away. 

So just be good at recognising what your losers are and cut them quickly. But also if you've got your winners run them for long periods of time, because if they're executing, don't get shaken out of them just because you're worried about inflation or politics or geopolitics. It's got nothing to do with that. 

How that company's execute and if you can do that well, that's generally the path to good returns.

#8 Invest in things that personally resonate 

Expert: Adrian Martuccio, Bell Asset Management

Be careful of the great trends and focus on something that really resonates with you. Something you want to talk about around the barbecue on the weekend to your mates, because then you have a bit of confidence when you invest in the company. So I think a great example last year was walking down the aisles of Bunnings, the hardware retailer, and you see all the green Riobi tools taking over the whole shelf space in there. Riobi is owned by a company called Tectronic in Hong Kong, which has been a brilliant performer. So something that resonates with you.

#9 Buy into the human condition

Expert: Nick Pashias, Antares Capital

Never underestimate the human spirit. There's a couple of really good examples. I think over the last few years that I'll point to. One is COVID and just the way human beings have adapted to deal with it. A lot of capital has been deployed, whether it's financial capital, intellectual capital, emotional capital. To deal with that. And we're all dealing with it. And that's not to say it's done with, I think we'll have to continue to deal with it, but that's one example. 

The other is one that's closer to my heart as a resource analyst. And that is decarbonization the carbon problem that the world faces and just to sit back and watch the world mobilise around that, to solve that problem. It's amazing. Again, the amount of financial capital, human capital, intellectual capital, that's been brought to bear to solve that problem. 

In times of uncertainty of frustration, just never lose sight of the ability of the human spirit to eventually get things done.

Be sure to catch the rest of our 2022 Outlook Series

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Buy Hold Sell

Buy Hold Sell is a weekly video series exclusive to Livewire. In each episode two fund managers give their views 'Buy, Hold or Sell' on five ASX listed companies. Not recommendations, please read the disclaimer and seek advice where appropriate.

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