“Learn to invest in the best quality you can afford” – Michael Kors
I am writing this blog from the coast of France – Cannes to be exact. No, I am not here for the film festival – though I admit it would be kind of cool to have attended. I arrived here yesterday as part of a cruise of the Mediterranean. A “bucket list” gift to myself for my 60th birthday.
While on the cruise I am attending a series of exhibitions and live auctions of various styles of art. There are works from contemporary artists as well as some of the Old Masters on display and for sale. Many of you may know, as a hobby I have collected antique stock certificates for many years. Having worked in the financial and investment world for over two decades, I have developed a passion for collecting items related to investing. In the past several years, this has extended into collecting other items of historical significance such as antique documents, cars, and in the last decade, artworks.
My theory of investing in these items for my own personal collection is the exact same theory that drives the investment philosophy for my own accounts, as well as those of the clients we manage: Invest in the very best quality you can afford. I would also add a caveat to that line of thinking – don’t overpay even for the best quality.
It is well documented in the investment markets that if you search for and buy the best quality assets, when they are priced by the market at a discount in the short term, you will, in all likelihood achieve better results with less risk, than chasing over-valued market darlings. Think about it from a common sense perspective – if you buy quality when it is on sale – and you are right, you might benefit from strong potential appreciation. However, if you are wrong, and the item you purchased was discounted due to a quality issue you didn’t perceive accurately, you have less chance of suffering a significant loss if you have been smart and bought at a discounted price. From personal experience, I believe this principle to be true when investing in non-equity market related items like stock certificates, stamps, cars, or art as well.
In summary, my advice for long term success, whether investing in equities or other collectible items, is to learn to analyze quality, and determine when it is being offered at an attractive price relative to its possible long term potential appreciation. Mastering this skill will not only provide potential financial benefit, but will allow you to enjoy the items in your collection for many years into the future.
Randy has more than 15 years of experience managing financial assets for individuals, retirement plans and businesses. Randy joined YHB | Wealth Advisors in January of 2018 and serves as the Director of Wealth Management. Prior to entering the professional wealth management field, he enjoyed building entrepreneurial business ventures from start-up to eventual sale and providing accounting services for public and private firms.