Fidelity’s Paul Taylor shares his Top 5 Tips with investors
Paul Taylor’s Top 5 tips.
In an equities market where bottom-up stock picking is becoming increasingly important, Paul Taylor, Fidelity’s Portfolio Manager of the Australian Equities Fund, which celebrates its tenth anniversary this year, shares his Top Five Tips for investing.
Tip 1: Do your homework.
Think about investing in the stock market the same way that you think about buying a home.
“When people buy a home, they go and look at the home, they do title searches, they look at the area, they look at what prices other houses have sold for in that area. They look at what railways are going to be built or what changes to infrastructure or facilities,” said Mr Taylor. “Investors need to go through the same process when they look at stocks.”
“Read the annual report – it has an incredible amount of information – and go and visit the store if it’s a retail store. Try the product. There are a lot of ways to better understand a company so approach it in exactly the same way that you would approach buying a house.”
Tip 2: Keep an investment journal.
Write down when and why you buy or sell a stock.
“I think this process has helped me a lot,” said Mr Taylor. “Investors should write down when they buy or sell a stock and this helps outline your investment thesis. As you go through time, you can then re-examine that investment thesis and ask yourself – what was the original reason for buying shares in that company? Does that reason still hold? You need to always understand why you own a company or why you don’t.”
Tip 3: Take a long term approach.
Investing in equities has a time frame of years, not months.
“My third investment tip is that the equity market is about taking a long term approach,” My Taylor explained. “Fundamentals don’t always play out on a three-month, six month or even a twelve month basis but they do on a three-year time frame. So investors need to take that view – they need to think about what company is going to be a great company in three years’ time, five years’ time or even longer. Be patient and take the long term view when equity investing.”
Tip 4: Investors need to attend Annual General Meetings.
Attend the AGMs of those companies you invest in.
“Investors should always actually attend the AGMs of those companies they invest in because it’s an opportunity to talk to the management team and the board about their strategies, and you also have an opportunity to ask questions which is extremely valuable. A lot of information comes out of an AGM so get involved in your investment, get out and talk to the management team and the board.”
Tip 5: Try not to put yourself in the position of having to sell a share.
“Often when you have to sell a share, it’s usually the worst possible time to sell that share. Try and make sure you have enough cash to take advantage of opportunities but don’t back yourself into a corner,” explained Mr Taylor.
