My full interview with Peter Brieger of GlobeInvest Capital Management originally appeared in my national bestselling book, Market Masters, which is available at Chapters, Indigo, and Coles as well as Costco and Amazon.ca.
Peter Brieger would tell you that it’s time in the market and not market timing that matters most for investment success. He has a long-term investment horizon. Peter holds high-quality stocks as long as they deliver ample returns. This is the reason why Peter has a sweet spot for income-producing securities that provide a consistent dividend stream.
With 50 years in the industry, it’s hard to fathom just how many dividend cheques Peter has received for himself and on behalf of his clients. In addition to dividends, there’s capital appreciation. The Canadian stock market has gone from $800 to $15,000 in that time period. Imagine buying into the market at $800, and then selling out at $1,000, on the belief that after a 25% return, markets were “too lofty.” That’s the major downfall of timing the market. Not only can you miss prolonged run-ups in the market, but significant short-term advances, too. Based on my analysis in Lessons from the Successful Investor, the S&P 500, from 1871 to 2009, delivered positive returns 72% of the time, while negative returns only 28% of the time. That means that for every ten-year time horizon, you can expect seven years of positive returns and just three years of negative returns in the market. These findings can be extrapolated to the TSX, as the returns in Canadian and U.S. stocks are similar. From 1934 to 2014, compound annual returns on Canadian stocks were 9.8% while 11.11% on American stocks. And, importantly, over that 80-year period, an investment in Canadian stocks has grown 1,597-fold despite 13 recessions, double digit
interest rates, and several world crises.
Peter has worked in the top financial centres in the world — Toronto, London, and New York — as a research analyst, then market strategist, and then portfolio manager. He started GlobeInvest in 1988, with the mandate to invest in high-quality businesses that benefit from global operations, in which he requires that 50% or more in revenues come from non–North American markets. Now, Peter finds himself at a crossroads. While his passion remains the market, investing, and making money for his clients, he recently sold his firm, GlobeInvest, to Christine Poole. Peter jokes before the interview starts that he’ll “stick around as long as Christine still needs me.” But if I was a betting man, I’d wager that Peter would come in to the office whether or not he was being paid. As a result of the sheer amount of time he’s had in the market, the seventies-ish Peter is the market. He’s an asset.
On interview day, I walked into Peter’s spacious office to find him slouching comfortably in a giant red leather chair behind his enormous wooden desk, clearly in his element. I saw a cane leaning on the desk to his right. A poster to my right caught my eye, a photo of an old bi-plane that had crashed into a tree. A caption read Money management and aviation are in themselves not inherently dangerous. But to an even greater degree than the sea, they are terribly unforgiving of any carelessness, incapacity, or neglect. Before we started our conversation, Peter riffled through and organized several stacks of paperwork on his desk, preparing the material that he would later use in the interview to explain his investment process. In his distinctive, growly voice, Peter went on to share with me some of the most crucially significant milestones in not just Canada’s market history, but that of the world. I felt like a student. And Peter Brieger was the master teacher.
Peter Brieger’s 15 Investing Lessons:
1) “Once I’ve decided that I like an industry, I focus on the leaders.”
2) “Aside from any macro-economic inflation or disinflation indicators, I focus on micro-economic factors.”
3) “I . . . look at . . . the shape of the yield curve. Nothing will kill an economy and stock market faster than a flat or inverted yield curve because they are usually the forerunner of a recession.”
4) “There are two sources of investment returns: income and capital gains.”
5) “On a global macro-economic basis, if you take a look at the world demographics, we like emerging markets long-term. Why? Because, with the exception of China and a few others, the emerging economies have the same demographic trends we had in North America in the fifties and sixties.”.
6) “One can gain exposure by investing in major international companies that have at least 50% of their business in emerging markets.”
7) “I believe it was Professor Jeremy Siegel of the Wharton School who pointed out that long-term stock returns were between 6% and 8% but half of that return came from dividends and their growth.”
8) “My biggest theme now is water. I think water’s the next oil, and fortunately we’ve had good luck with water companies that have been taken over. [However], water is not the next three-month, six-month, or one year story — it’s a twenty- to thirty-year story.”
9) “If you believe the emerging market story, their populations will demand a higher standard of living, especially with better quality foods. So we review fertilizer, seed, and agriculture equipment stocks.”
10) “The basic truth is that if you give 10 different money managers the same information, you may see 10 different reactions.”
11) “I think book value matters less. . . . It’s what the assets produce that actually matters.”
12) “If the price takes a hit, we quickly determine whether that hit was a one-off or something more serious. If it is the former, we buy. If we think it is the latter, we don’t buy.”
13) “Earnings’ growth must be what powers markets upward.”
14) “People’s time horizons have drastically shrunk. They want instant gratification through returns. That’s not investing — it is sheer speculation. ‘Slow and steady wins the day.’”
15) “Staying with a discipline is key. From time to time it may seem not to be working but, assuming it has been well thought out, it will serve you well in the long run.”
Robin Speziale is the national bestselling author of Market Masters, which is available at Chapters, Indigo, and Coles as well as Costco and Amazon.ca. He lives in Toronto, Ontario. Learn more about Market Masters.