By Tom Bradley

The preacher: Tim Price, Director of Investment at PFP Wealth Management in the U.K.

The converted: Steadyhand, Manager of the ‘undex’ funds.

As noted in previous posts, I enjoy reading Mr. Price’s weekly note. He challenges the conventional thinking that permeates the headlines and market commentaries. In his October 12th piece, he writes about absolute return investing, how appropriate it is (particularly for the wealthy) and how hard it is to do (psychologically).

Here are three separate but related excerpts from the note.

“The pursuit of absolute as opposed to market-relative returns is complicated by at least three factors, all psychological. One of them is greed. One of them is short-termism. And one of them is the role of irrepressible cheerleader played by the investment media.”

“During bull markets, investors typically crave market-relative returns – they want to beat the market, or at least come close to matching it. Everyone else is making money, they perceive, and they don’t want to miss the boat. That problem is compounded by the self-interested herd-following that passes for professional investment management. During bear markets, on the other hand, investors typically crave security and preservation of capital.”

“Market practitioners and investors of a certain vintage will see the problem inherent in the pursuit of relative returns during bull markets and absolute returns during bear markets. This presumes that market timing can be practiced consistently, diligently and efficiently. I know of no investor on the planet who can time the markets with any form of precision or consistency.”

Related reading:
Six Questions to Help You Navigate These Choppy Markets