This morning I was having the usual coffee sessions with a few of my colleagues when the topic got around to investing. These colleagues don’t know the exact nature of my portfolio and investing style so I basically got to hide under the radar and listen to the more experienced folks share their war stories. This leads to pretty interesting and thought-provoking ones.

Tale of the day came from a more senior colleague (let’s call him Uncle P) who swears by investing in S-reits. Said reason for investing in reits is because of a talk given by another colleague on the topic sometime in late 2007. After which, he plonked money into the markets when they came crashing down with the collapse of Bear Sterns and Lehman Brothers. His timing couldn’t have been better and he bought into reits at yields that investors would die for. For example, he bought into the same reit that I have. Only thing is, my yield in Aug 2007 when I first bought into the position was some 7%. Uncle P’s? A whopping 30% based on the DPU then.

Uncle P then talked about accumulation and being unperturbed by market gyrations. A fall in price invites an opportunity for more. That’s what he said.

The second half got more interesting when Uncle P revealed that he actually sold the counter for three times his cost as the market ran off. That wasn’t the only counter. He sold off other holdings bought at dirt-cheap basement bargain prices as they ran up, only to see those run up even more.

Then, it struck me.

It takes someone really extraordinary to hold onto his holdings for the long-term. Talk is cheap. After all, why give up an annual yield of 30% for 300% capital gains when more than likely, the switch will be into other counters where prices have run up and returns are likely more muted.

Also, Uncle P took a nibble approach even though prices were terribly, terribly cheap. (I know, I know, hindsight is 20-20. More on overcoming that another time). My view is the nibble approach won’t help if you’re a young person with an average salary, frugal lifestyle and yet looking to make the leap into an elevated income class.

If counters are at bargain prices, it makes more sense to bet the farm (and some more) because these crises (on the scale of the GFC) don’t come around that often. When it comes, we gotta make it count. That’s my view of why Uncle P is probably still a colleague of mine today.

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