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www.insideHALTON.com |OAKVILLE BEAVER | Thursday, January 26, 2017 | 2 6 For those who like to pick stocks - you don't need to read this T he cat-and-mouse game of picking indi vidual stocks and trying to outsmart the market for your own financial gain is a strategy some investors enjoy. It can be fun, however, it is not very profitable. Many like to seize the moment, be proactive, and predict what stocks to buy and which ones to sell. To some it is more than just investing; it' s a challenge, a game, it' s what they do. Winning provides a thrill and a reassurance in your predictive ability. Winning transactions provide great stories between golfing buddies or other active trading enthusiasts. What many who actively trade their invest ment account with their own buy and sell de cisions do not realize, is there are others who scratch their heads and wonder why. Behav ioural finance experts have a field day dissecting human behaviour. Why would anyone try to do something that has not been done successfully? Especially if it is trading that costs these types of investors bil lions of dollars annually. The question of the day: Can someone hope to beat the market? The World Federation of Exchanges provided information on world stock markets in 2015. The number of global equity transactions that occurred every trading day was 98 million. In dollars, they were worth $447 billion U.S. All buyers and sellers of securities attempt to Dollars & Sense Peter Watson Guest Contributor get the best deal possible. Sellers want the highest price and buyers want the lowest price. Another word for this process is capitalism. All market participants are attempting to benefit. Capital markets are very liquid and money ebbs and flows around the world. An investor might think they have an inside advantage be cause of their prediction, but there can be thou sands of inf uences on the value of a stock of which the investor is not aware. In simple terms, for those who actively buy and sell stock, we wish you well. Good luck. Your strategy has not proved successful for oth ers who have attempted it. Take away the competitive instinct that en courages many to play this game, and active trading is nothing more than going to a casino with the odds stacked heavily against you. The advantage we have when it comes to understanding, if active investing of buying and selling individual securities is successful, is that investment returns for professional managers are tracked. We do not know how each individual investor performs, however, we do know how each professional manager performs. I would like to ask each reader a question. I want you to guess at a figure. We have 15 years of investment performance information from the U.S. market ending in 2015. Fifteen years earlier there were close to 3,000 equity mutual funds offered in the United States. My question is how many of those managers outperformed the markets they invested? These are not do-it-yourself investors. They are profes sional managers who invest on behalf of their mutual fund investor clients. Go ahead and guess what percent of those managers beat the market. This is your last chance to guess because the answer is in the next paragraph. Only 17 per cent of professional managers beat the underlying market that they invest. The majority of security trades are done be tween professional managers and they have a competitive advantage over the individual inves tor. If the professionals have dismal performance records, then we cannot assume an individual investor would have better performance results. I discourage you from actively trading your ac count, and encourage you to invest in a diversi fied collection of stocks. -- Submitted by Peter Watson of Peter Watson Investments and Aligned Capital Partners Inc., MBA, CFP, R.FP, CIM, FCSI., Certified Financial Planner PIC-A-DELI (^Weekly Specia ls: Thursday Nights: Domestic Pint & 1 lb of Wings $999 Daily special: Large 3 item Pizza- $9" Dine In & Pick up only Featuring Best Montreal Smoked Sandwiches · All Day Breakfast. H o u rs : M o n d a y - S a t u r d a y 7 a m - 1 a m C lo s e d S u n d a y s . Voted Best Accountant by Oakville Beaver Readers for 10 Consecutive Years · Accounting · Auditing · Taxation Ricky Wong CPA, CA, MBA, B. Eng For more information please check our website www.rickywong.ca 670 Fourth Line (9 0 5 ) 339-1905 1200 Speers Rd., U nit 32, Oakville, O nt. 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