Many times over the years I have been asked how I would approach investing. However, before embarking upon a journey into my investment creed, it is worthwhile asking a question that doesn't get asked often enough: what is the aim of investing? Sir John Templeton put it best when he said: "For all long-term investors, there is only one objective – maximum total returns after taxes.” Nothing else matters. So the question becomes: how should we invest to deliver this objective?
1. Value, value, value
The price I pay for an investment determines its likely return. No asset is so good as to be immune from the possibility of overvaluation, and few assets are so bad as to be exempt from the possibility of undervaluation.