Do You Sincerely Want to Be Rich?

Published in Investing Strategy on 2 July 2010

Tune out the 'blockers', and take long-term view.

A lot of the job of a management consultant is about implementing change. And early on in my consulting career, I learned to watch out for the 'blockers'.

Blockers, in short, are people who resist change by pointing out all the reasons why something might not work, and isn't a good idea -- rather than thinking about the reasons why something should work, and is a good idea.

And with the FTSE 100 index now down just over a thousand points since mid-April, the blockers are certainly out in force. I expect to meet at least one in my local this evening, shaking his head and pointing out the folly of investing in anything other than nice, safe deposit bank accounts.

Danger: blockers ahead

There are plenty of blockers in the media, too, and out there in blogland.

As Bruce Jackson points out, recent economic news has at least one pundit talking about a third depression, brought about through the wave of fiscal belt-tightening presently sweeping across western economies. And in this case, the pundit is none other than Paul Krugman, a widely-respected economist.

Certainly, there's no shortage of news to worry about if you want to go looking for it. But the trouble is, it can rapidly lead to 'analysis paralysis', and a conviction that now isn't the time to invest. The result? Missed opportunities, and on a significant scale.

Blockers, in short, can block you from getting rich, and retiring early. And you do sincerely want to be rich, don't you?

Time travel

For a moment, let's turn the situation on its head. We're back in mid-April, and the FTSE is at 5,825.

Now, the blockers are telling us that nice safe-looking shares with a reasonable yield are starting to look fully-priced.

Take Tesco (LSE: TSCO), for instance, at 450 pence. It's easy to remind ourselves that back in the late summer of 2009 the share price was just 370 pence, and kick ourselves for missing the boat. If only we'd bought back then, we tell ourselves, wishing that the share price would somehow magically fall again to such bargain basement levels.

Well, we've got our wish. Yesterday, Tesco actually dipped below 370 pence, to an intra-day low of 368 pence.

Did you buy?

Nuggets of wisdom

At times like these, I'm reminded of several nuggets of wisdom from investment guru Peter Lynch, who as manager of Fidelity's flagship Magellan fund outperformed the market year after year.

Here they are:

  • If you spend 14 minutes a year worrying about the market, you've wasted 12 minutes.

  • You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready, you won't do well in the markets.

  • The key to making money in stocks is not to get scared out of them.

  • When stocks are attractive, you buy them. Sure, they can go lower. I've bought stocks at $12 that went to $2, but then they later went to $30. You just don't know when you can find the bottom.

Long-term view

There's a message, there. And something of an investing thesis, too.

Tune out the noise. Look at the fundamentals. If it's cheap, buy. 

Sure, it might get cheaper still -- but in the meantime it's paying you a dividend, and you're repeating the pattern by buying something else, as well.

And it's a logic that works for any number of big, dependable businesses with strong brands, a global franchise and Warren Buffett-style competitive moats. Tesco, for instance. Or GlaxoSmithKline (LSE: GSK). Or Unilever (LSE: ULVR).

Or, if individual companies aren't your style, how about a FTSE All-Share index tracker? Or a FTSE All-Share ETF?

Or even an investment trust? Scottish Mortgage (LSE: SMT) has been riding out uncertain economic conditions since 1909. Others go back even further: Foreign & Colonial Investment Trust (LSE: FRCL) has been steadily accumulating wealth since 1868.

And so can you, if you tune out the blockers and take long-term view. If, that is, you sincerely do want to be rich.

More from Malcolm Wheatley:

> Malcolm holds shares in Tesco, GlaxoSmithKline, and Scottish Mortgage.

>  Claim your FREE financial guides -- The Motley Fool has teamed up with a number of partners to offer our users free financial guides on topics such as tax planning, funds and much, much more. Click here to download your reports today!

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rober00 02 Jul 2010 , 5:00pm

Good piece Malcolm!!!

geeWCee 05 Jul 2010 , 2:08pm

Yes well written article. I better go check out Tescos price!

maarkyboy 05 Jul 2010 , 5:03pm

It often takes a great deal of intellect to state the obvious. Well done, a great piece.

Fingered 06 Jul 2010 , 12:49am

Yeah yeah Malcolm, know all about the "blockers" in management consultancy, project management etc etc blah blah blah .....that's all fine and dandy stuff of MBA school ilk and others...Trouble is, you are dealing with a market place......and whole different set of principles and rules apply, so this management theory malarkee goes clean out of the window I'm afraid. Sorry. :-)

Fingered 06 Jul 2010 , 12:53am

..FTSe no longer at 5825, its 4800 area and weak technically.....

suewhistle 10 Jul 2010 , 1:49am

"And early on in my consulting career, I learned to watch out for the 'blockers'."

You obviously never learned that many people in the organisation already recognised changes that were needed, but were never in a position to be listened to. Of course there was effing resentment at somebody paid £800 a day; and naturally the external consultants didn't get the full benefit of the knowledge of somebody within the organisation you were examining.

3064ac19p 14 Jul 2010 , 12:02pm
3064ac19p 14 Jul 2010 , 12:03pm

so what you are saying is that if I buy some tesco @say 380 I will become sincerely rich?

NigelTMF 14 Jul 2010 , 3:52pm

Tell me Malcolm? Are you sincerely rich?

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