Addressing Common Investment Misconceptions

Perception

Dividend-paying equities do not perform as well as other equities.

Reality

There may be periods of time where dividend-paying equities do not perform as well as the rest of the market, however, over the longer term, dividend-paying equities have outperformed the broader market.


Perception

Companies limit their growth by paying dividends, making them less exciting.

Reality

Growth investors may argue that dividend payers would be better off reinvesting payouts to fuel growth. Though dividend payers set corporate profits aside for dividend payouts, this does not mean that they are slow growth or any less exciting. Further, a commitment to paying dividends places a restraint on management to act prudently on behalf of its investors to grow while maintaining a certain level of financial discipline knowing that the company must produce a certain amount of cash flow for dividend distributions.


Perception

Having a long-term investment horizon is only for people who do not understand how the stock market works.

Reality

Many years of data supports that investors are better off with a long-term investment horizon. We are focused on the long-term results, and through our in-depth research and analysis, we have the power of our conviction in our investment management executions to help clients meet their long-term financial objectives.


Perception

Short-term investing produces the best results as an investment manager can quickly sell positions before they decline in value.

Reality

While we would like to say that we always exit our clients’ investments at the top of the market, it is nearly impossible for any investment manager to always time the market to exit positions before they drop. Our clients’ personalized investment portfolios are aligned with their long-term financial needs, objectives and/or legacy goals—we are committed to fulfilling these goals rather than chasing market levels. What we are really dedicated to, is to help our clients preserve and grow their wealth while providing downside protection as we invest with a long-term outlook.


Perception

The stock market is always right, therefore following the Index, otherwise known as passive investing, produces just as good if not better investment returns than picking stocks based on analysis (active management).

Reality

By selecting investments based on fundamental analysis and valuation, we are able to choose which stocks and sectors we believe our clients should have exposure to, as well as their respective position sizing, to provide downside protection from the overall stock market if the market drops.


Perception

Utilizing low cost methods of investing such as Exchange Traded Funds (ETFs) provide the best returns.

Reality

There may be a place in your investment portfolio for low cost investment tools such as ETFs. While ETFs have enjoyed a spectacular growth in popularity due to their low-cost nature, like all good things, they also have drawbacks—the most important of which is to have limited to no downside protection when the market drops if you only utilize this investment vehicle in your portfolio.

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