Don't dig up the flowers and water the weeds

In our latest Money Master Class fund manager John Chatfeild Roberts gives his expert insight into investing.

John is chief investment officer at Jupiter Asset Management and manages a number of funds, including the Jupiter Merlin Worldwide Portfolio . He is also the author of Fundology: the secrets of successful investing.

He says:

1. Buy when others are fearful. It will be difficult, because there always appears to be good reasons why there is fear; prices will be falling and the newspaper headlines will not make pretty reading.
2. Buy investments that don’t have a time limit. Time will often bail out a badly timed decision, but anything that can expire – an option, derivative or bond, can expire worthless before whatever you were hoping to happen actually does!
3. Run your winners and cut your losers. As Warren Buffett says: ‘Don’t garden by digging up the flowers and watering the weeds.’

We say:

John runs £6.9 billion of money and has returned an average of 32% across his four funds since 2008, so his advice is worth taking on board. One point that John illustrates very well is that investing isn’t easy. It’s difficult to pick your investments, and it is also tough to know when to hold on to them and when to ditch them.

If you let emotions get in the way of investing you run the risk of following the herd. The problem with the herd is that it often panics, which means selling when prices are low and buying when prices are high – which is exactly what you shouldn’t do if you want to play the stockmarket successfully.

Successful nvesting is treading a fine line between holding on for investments to pick up, and crucially knowing which ones will do so, and cutting your losses on investments that are going nowhere.

Check out some more Money Master Classes:

• Tip to savers: don't despair when markets fall
• Stick to your plan in good times and bad
• Ignore day-to-day shifts in the stockmarket
• Keep costs low and don't squander tax allowances
• Save in the same way that you invest in your home