Beyond The Headlines
It’s Always the Right Time
I remember getting introduced to a new client a while back. I was a novice portfolio manager. I was looking forward to our meeting, but I faced a bit of a challenge. I wanted to impress him with some new investment ideas that we could use right away. The stock market was reaching multi-year highs, everything looked pricey, and I had no immediate stocks I wanted to buy. The meeting went very well despite that, a nice lunch followed it, and I learned a lesson that day that I’ll never forget. It’s always the right time to start investing. Let me explain.
Whenever the stock market runs up as it has in the last twelve months, I get asked a similar question. Is this the right time to start investing, or should I wait? This question makes me think of the Chinese proverb: “The best time to plant a tree was 20 years ago. The second-best time is now.” Investing works the same way. We all wish we started a long time ago, but if we haven’t, today is the day!
Now and then, we get introduced by one of our existing clients to potential new clients. We always welcome the opportunity to help. It sometimes happens that they might be joining us when the stock market offers little in terms of immediately buyable new opportunities.
Today, the stock market levels might feel elevated, and the obvious investment opportunities might be scarce. There are always businesses out there that we respect and like, but the prices quoted by the market aren’t always compelling. The risks appear too high and the rewards too slim. In that case, we simply wait.
When I met our new client, I was in the early stages of transitioning from being an analyst to a portfolio manager. This growth path opens a world of opportunities but comes with great responsibility as well. The questions and challenges go far beyond whether this stock is a good buy or not. It encompasses a greater vision for the investment portfolio, its purpose, and how this particular stock can fit in the picture. The goal is to keep and grow wealth over the long run. We might be risk-averse and cautious, but we act quickly when compelling opportunities arise.
This new role of a portfolio manager requires a good amount of empathy and listening. It’s that moment when an investor learns that stock investment doesn’t exist in some financial void. It’s someone’s life savings or inheritance that are put at a calculated risk to harvest the rewards down the road. Since it’s someone’s capital, it’s essential to take into account the client’s preferences, and most of all, the risk tolerance.
I find that part very fulfilling. It closes the loop in my mind between picking an investment and seeing what role it can play in someone’s life, what difference it can make.
The new client that I was introduced to as a novice portfolio manager came with an existing portfolio. He had some legacy stock positions. When we spoke, he took the time to walk me through the history of the portfolio and shared the stories behind all holdings with me. He was willing to sell some of them, others he wanted to keep for the long run.
I remember our first meeting. We talked on the phone a few times, but it was that in-person meeting that I recall vividly. It was a winter day; I arrived early at a restaurant. When he joined me, we exchanged pleasantries and embarked on a long conversation about his career and investment preferences, and I started to see what kind of risk tolerance he had.
There was not a single stock I could say that we had to buy right away at that particular moment. Instead, I shared with him half a dozen companies that I was researching, but I mentioned that none were at the price I’m willing to pay.
I really liked that he respected it and said: “when the time is right, find room in the portfolio and start buying them.”
Over the coming few years, several things happened. We had a chance to get to know each other and share many long phone calls, dinners, and lunches. He allowed me to indulge in my investment curiosity. At times, on top of many more recognizable core positions, we’d buy some well-researched, very promising, but lesser-known stocks. He’d often say: “Tell me more about it; what do they do?”
I was always impressed how he remembered the stories, the businesses, the pivotal moments. I’d even get praise now and then when he’d notice that a particular investment finally got the attention of the general public. He’d reach out right away to tell me: “Look, look, you found it three years ago, and they are writing about it now.” He’d add: “I wasn’t sure about that one, but you were so convincing!”
I remember he called me “deliberate in my actions” more than once. It took me a minute to see that it was a compliment and what he meant by it. Everything I did with the portfolio had a good reason and specific goal. It was always clear to me why a certain stock comes or goes or how big of a position we feel comfortable holding. I think “deliberate” sums it up well.
These days, when the question if it’s the right time to start, comes up, I immediately think of this relationship, this client. When we met for the first time, I had no new ideas for him, the stock market was high, and opportunities were few. We took the time to get know each other, and soon enough, the portfolio filled up with many new ideas.
Similar stories repeated many times over the years, including early 2020 when the market offered limited immediate stock picks, followed by one of the best investment windows in years. We had new clients join us when there was almost nothing new to buy, but in a matter of weeks, we found more ideas than we had seen in years.
My mentor and partner, François Sicart, often reminds me that what we do is much more than investing. Our practice is all about building and nurturing relationships, and it’s always the right time for that!
The information provided in this article represents the opinions of Sicart Associates, LLC (“Sicart”) and is expressed as of the date hereof and is subject to change. Sicart assumes no obligation to update or otherwise revise our opinions or this article. The observations and views expressed herein may be changed by Sicart at any time without notice.
This article is not intended to be a client‐specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon. This report is for general informational purposes only and is not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally.