Understanding behavioural investing and advising

John S. Clark, President and Founder of Pacific Spirit Investment Management laughs when he says, "We tell our clients that we spend half our time managing their investments, and the other half managing them."

But he's very serious.

"Research shows that individual investors tend to be their own worst enemy," John continues. "They make decisions based on the wrong information at the wrong time and consequently hurt their portfolio's performance."

A case in point, John notes, is our tendency to want to sell stocks as the market settles into a decline and buy stocks back when the market is well into its recovery.

"The goal," says John, "is to sell at the top of the market and buy at the bottom. People seem to be hard-wired to do otherwise."

Individual investors tend to get caught up in a self-defeating cycle.

"Market bubbles occur when everyone starts to plough in," John explains. "At Pacific Spirit, we manage our client’s behavior so that they can achieve their long term goals."

When John and the Pacific Spirit team see market values dropping, they reach out to their clients and suggest that it is a good time to buy.

"We tell them that the market may not be at the absolute bottom," he explains, "but after a major decline a lot of the risk has actually been rinsed out of the market. And we absolutely discourage clients from buying at the top of the market."

When you're considering working with a portfolio manager, John recommends remembering that it's a different experience compared to investing on your own.

"Our ideal client is someone who can delegate the investment authority to Pacific Spirit," he says. "We report back to them regularly about what we've done and that is the reason clients trust us fully and also trust us exclusively."

Using a fee-only based approach, Pacific Spirit works to educate clients on the volatility of the market over the short-term.

"Yes, the market is unpredictable and there may be periods of negative returns," John explains. "But in the long-term, the returns from investing in the stock market can be much higher than those earned in other investment arenas. Our job is to make our clients' financial dreams a reality."

For more information on Pacific Spirit Investment Management and behavioral investing, call 604.687.0123, check out the website, send an email, or visit the offices at 1100-800 West Pender Street, Vancouver.

© North Shore News

Report a Typo or Error

Community Events Calendar