The link between value investing and financial literacy

November 12, 2018

November is Financial Literacy Month, the 7th annual effort by the Financial Consumer Agency of Canada to encourage Canadians to take control of their financial affairs.

The FCAC is an independent federal government agency whose goal is to help people take charge of their financial well-being in order to manage their money more effectively, manage debt and save and invest for the future. The agency focuses on household finance, including budgeting, spending and saving and investment planning. 

The FCAC website has plenty of resources in each of these areas, including links to the many public, private and non-profit institutions it works with.

One FCAC message is that a key to success is having a plan and sticking to it. When that rule is applied to investing, it means avoiding short-term market noise and keeping an eye on the bigger picture. It also means being patient and investing in companies with established businesses, a history of profitability and paying dividends. All those things point to quality. Quality is what thrives in good and bad times.

When it comes to investment quality Warren Buffett’s oft-repeated quip is the one that is remembered. Buffett says he only buys companies he can buy and hold forever. The comment popularized a notion articulated decades earlier by Benjamin Graham. Graham is referred to as the father of value investing, which is investing with a  focus on buying under-valued, high quality securities and holding them for long periods. Buffett just recasts Benjamin’s observation that says you should ignore temporary setbacks and pay attention to long term fundamentals.

Michael Kovacs, President & CEO of Harvest Portfolio Group Inc. founded the company in 2009 during one the most difficult periods for investors. He told Wealth Professional in a September 2018 interview that he decided to build his company on the Buffett and Graham way.  

This is a focus on owning strong businesses and growing with them over time. Kovacs said in the interview, the strategy generates long-term capital growth and an attractive income stream for investors.  It does this by applying a quantitative and fundamental approach to build ETFs that are simple to understand, transparent and built on solid fundamentals.

When it comes to financial literacy, it can be best to understand the basics: sticking with quality, being patient, diversifying and having a plan. – AM

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Certain statements in the Harvest Blog are forward looking Forward-looking statements (“FLS”) are statements that are predictive in nature, depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” “intend,” “plan,” “believe,” or  “estimate,” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS.

FLS are not guarantees of future performance and are by their nature based on numerous assumptions, which include, amongst other things, that (i) the Fund can attract and maintain investors and have sufficient capital under management to effect their investment strategies, (ii) the investment strategies will produce the results intended by the portfolio managers, and (iii) the markets will react and perform in a manner consistent with the investment strategies. Although the FLS contained herein are based upon what the portfolio manager believe to be reasonable assumptions, the portfolio manager cannot assure that actual results will be consistent with these FLS.

Unless required by applicable law, Harvest Portfolios Group Inc. does not undertake, and specifically disclaim, any intention or obligation to update or revise any FLS, whether as a result of new information, future events or otherwise.

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