Business: Don't be afraid of volatility to reap market success
3 Steps to Investment Success By Rory Gillen
Published 13/12/2012 | 05:00
For those who don't know, Rory Gillen is a co-founder of stockbroking firm Merrion Capital, and was its head of institutional research until he left in 2009.
He now runs Gillen Markets. So, there's little doubt that Gillen has the credentials to write a book on how to achieve investment success.
But having the right credentials doesn't necessarily result in the ability to deliver a sound product. Thankfully, Gillen has largely succeeded in providing a clear view of how markets work and how anyone can establish and cement a strong portfolio over time as long as they stick to prudent planning, sound investment choices and don't succumb to either panic or herd behaviour.
"There is no silver bullet for investment success," he says, "and you can treat anyone who suggests otherwise with a healthy degree of scepticism."
He tells us that the common investing errors include the inappropriate use of debt or leverage, a lack of diversification, poor-value and speculating rather than investing.
"Fear, greed and hope can undo the best-laid plans, and if we lose control of our emotions due to a lack of understanding of volatility, then we may never reap the returns on offer in risk assets, despite our good intentions," he warns, urging readers to distinguish between volatility and risk on the stock markets.
But while urging readers to invest in stock markets, he cautions them about choosing to directly buy stocks for their own portfolio.
"Most private investors underestimate the difficulties and dangers of selecting individual shares for their savings programme or pension fund," he says.
But as accessible as Gillen's book is for the most part, there's still plenty that could prove a bit daunting for the real novice investor, no matter how plainly he has tried to educate.
Not to mention the fact that he suggests investing €250 a month as a good starting point – free cash that many people would find difficult to get their hands on in the current climate.
Also, so many people are seeing their company pension schemes burned that they've probably been put off investing for life, unfortunately.
But what Gillen does do is set out why, over time, investing in stockmarkets, especially when it's done prudently and on a compounded basis, delivers the kind of returns that leaving cash in the bank can never do.
For those still unsure, his book is well worth a read.
Available with free P&P on www.kennys.ie or by calling 091-709350.
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