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.
Capital Expenditure (CaPex): improvements, projects, or new investments undertaken by management.
Compound Returns: the process by which money builds on itself over time in an exponential fashion. For example, $100 grows at 10% to $110 in year one. But then in year two, $110 becomes $121 at the same 10% return.
Consumer Price Index: a measurement of the change in the cost of living for consumers.
Market Timing: when investors frequently buy or sell investments based on events that occur within a short period or at a specific time (e.g., a stock price crosses over the 200-day moving average).