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My full interview with Norman Levine of Portfolio Management Corp originally appeared in my national bestselling book, Market Masters, which is available at Chapters, Indigo, and Coles as well as Costco and Amazon.ca.

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Norman Levine has been around the block. Over his 39 years in the investment industry, he survived the inflationary era in the 1970s, Black Monday in 1987, the technology boom and bust in 2000, the global financial crisis in 2008, and the euro crisis in 2011. Up on Norman’s office wall is an old framed photo of a Bloomberg terminal screen that shows the carnage that occurred on that Bloody Monday, where the Dow Jones Industrial Average dropped 22.61% and the TSX dropped 11.32%. It was an angstfilled, record-breaking day. By the end of October, the TSX had fallen further to post a 22.5% decline. I asked Norman how he reacted on Bloody Monday and over the remainder of that October. His response should be carefully studied, as there’s no doubt that you will experience similar flash crashes in your time as an investor.

It seems that an uncertain market is a profitable market for Norman. You’ll find through numerous examples in the interview — BCE, European stocks, U.S. financials, CCL Industries — that he is an opportunist. Norman sees opportunity before it is obvious to the common investor and captures not only the early leg up but then another string of gains when institutions and retail investors pile into his holdings. Norman swoops in like a hawk as soon as he sees some short-term negative event impact stocks or when he finds stocks that are overlooked and improperly priced. His experience also teaches us that simply buying mispriced stocks will not earn investment glory. One also needs to foresee and then anticipate a catalyst that will propel those stocks out of their low points or holding patterns. Norman is an expert at a challenging skill: finding opportunity.

Every time I see Norman, he’s wearing a new suit with a coordinating tie or bow tie and cufflinks. His closet must be the size of my onebedroom condo. Norman tells me, “It’s important to dress well in this business. It really does make a difference.” He sprinkles in some Yiddish when he explains that his “dad used to dress like a shmatte.” I can’t help but glance around his office; there’s so much history packed within Norman’s four walls, not to mention a mini putter machine on the floor, which most likely serves as a relaxing escape from a tough day in the market. I was drawn into Norman’s storytelling as we spoke. Norman has that classic old-style swagger, combined with a hard gaze when he locks onto your eyes. Norman is a remarkable figure in the Canadian markets — it’s hard to fathom that he was fired from his first job as a broker. It just goes to show that you never know what the future holds.

Norman Levine’s 17 Investing Lessons:

1) “If the markets were efficient, you wouldn’t have the volatility. There’s emotions. It’s so critical to understand how people think when they invest. They’re not efficient at all.”

2) “Commodity markets move in decade and even multi-decade cycles.”

3) “Nothing goes straight up and straight down in the market. You get these rallies and people get sucked into them. I would rather lose some opportunity on the way up than lose capital on the way down.”

4) “I would rather see commodities stop going down, probably tread water for a long time, or even form a V, and then buy them when they’re starting to go up again.”

5) “Commodity stocks are not value stocks. And they never will be.”

6) “We don’t buy industries, and we don’t buy countries, we buy stocks. And we look all over the world for them.”

7) “We’ve never invested directly in China, [Russia,] or in India, but that’s subject to change in the future. Basically, their security markets are not mature and do not have the safety standards of markets we like to invest in.”

8) “If you’re a genius in our business, you’re right 60% of the time. So you’re wrong 40% if you’re extraordinary. That’s why you’ve got to have a diversified portfolio. Because you’re going to be wrong a lot.”

9) “For retail investors, I would suggest around 20 stocks. And they should be diversified. Too many people don’t diversify.” 10) “We don’t own any [U.S.] ‘money-centre banks.’ We only own regional banks.”

11) “If you own a value stock that doesn’t have a catalyst, it might go down and out . . . It’s always going to be a value stock, and that’s the trap. People get sucked in to that all the time, saying, ‘Well, the stock is cheap.’”

12) “A lot of people are fixated on return, but smart investors are more interested in protecting their capital, and then a return on that.”

13) “You can’t have a target [price]; a lot of people get hurt by targets. If somebody asked me, ‘What are you going to return for me this year or next year or the next five years?’ I’ll respond, ‘I haven’t got a clue.’”

14) “If you want to short stocks, wait until they’re going down. Follow the trend going down.”

15) “‘Never fight the Fed.’ And generally that’s true. If the Fed says that they want to send interest rates down and keep them down, don’t bet against them. The opposite is also true.”

16) “Most people only know a declining interest rate environment. They have no idea what happens when interest rates go up. Once interest rates start going up, money starts to leave the stock market and heads into fixed income.”

17) “Don’t fall in love with what you own. Most investors fall in love with what they own. It’s a stock. It doesn’t know you own it. It doesn’t care that you own it. Don’t be afraid to sell something because of the capital gains tax.”

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.