In the world of DIY investing, particularly when it comes to dividend investing in Canada, there are diverse opinions on the best strategies to employ. Recently, I came across a blog post by a fairly prominent Canadian dividend investor that challenges several well-accepted principles of investing. His self-confidence is certainly impressive:
“I’m not saying that anyone who disagrees with my investment strategy is dumb, but I’m only interested in helping or talking to those whose are interested in learning, or considering that there might be a different way to invest then how most do. For the rest, the hell with them!” What exactly were this blogger's detractors saying that justified such vitriol? He went on to include a laundry list. Here’s a sample of financial principles this author takes offence to:
That one should always take into account their adversity to risk or risk tolerance.
That one should maintain an asset allocation, and rebalance their investment to maintain a reasonable percentage in each category.
That one should not be 100% invested in just Canadian stocks.
That it is important to be invested in different markets because Canada only represents a small percentage of the global GDP.
That other countries have outperformed the Canadian markets.
That the best way to diversify one’s portfolio is to own some ETFs.
That no one stock should exceed 5% or so, of your total holdings
That one should invest across various sectors, and markets to minimize potential losses from market fluctuations. While I respect differing viewpoints, I believe that some of the advice given could potentially mislead investors and lead to suboptimal outcomes. Here’s why I think it’s important to consider risk tolerance, asset allocation, and diversification in your investment strategy.
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