Candyland

Photo courtesy of Jason Meredith

The dress was pink chiffon. Cotton candy pink. It was strapless, with a fitted bodice, nipped in tight at the waist, and the skirt a big cloud of translucent chiffon. I simply had to have it and price was no object. That evening, I tried it on again in my bedroom. Under the overhead lights, I noticed that the pink was faded and yellowed in certain spots. Looking at myself in the full-length mirror I had to admit that the huge volume of chiffon made me look even shorter than I was. Suddenly I realized I had neither the shoes, handbag or jewelry to match the dress. It also occurred to me, I would never, ever in this lifetime be invited to a cotillion, which is the only kind of event at which a 16-year old girl could wear this froth. Plus, even if I were invited to one, I had no boyfriend to take me. Shit.

What I didn’t know then and sort of know now is, before you go chasing after the ‘wow’ pieces, build a solid wardrobe of boring but hardworking staples like the little black dress. Things that will actually benefit you in the here and now, not in some fashion fantasy life.

Same goes for investing. Many so-called investors chase after the latest thing that some pundit is touting in the press, instead of concentrating their efforts on building a set of core holdings and then, if the urge continues, venturing beyond for some badaboom action.

Since most of us, including the pros, are terrible stock pickers, studies show that owning a basket of well-diversified equities, either directly or through ETFs, mutual or pooled funds is, over the long term, the best strategy.

Staying fully invested, even through downturns, has proven to be successful too. A recent study by  Bernstein Global Research looked at 1,000, 12-month periods from 1926 until 2013. Those investors who put all their eggs in the market at one time averaged returns of 12.2 percent, whereas those who bought in gradually made 8.1 percent. The worst performers were those who stayed in cash on the sidelines. They netted 4.1 percent.

If I were building a core fashion wardrobe it would look like this: Marlowe cashmere v-neck sweaters in white, oatmeal, black; Gucci or Chanel wool gardardine slacks in black, grey; Chanel little black dress; Akris white shirts; Repetto loafers, Prada sport shoes; Max Mara camel hair coat; Hermes Evelyne or Jypsiere bag; Cartier Tank Francaise watch; Cartier Love bracelet; Tiffany diamond ear studs; Tiffany Elsa Peretti Diamonds-by-the Yard pendant. Done!

If I were building a core investment portfolio it would look like this: Pipelines (Transcanada, InterPipeline); Consumer (P&G, Unilever); Financials (Scotia, TD, RBC); Industrials (Deere, Fluor, Dupont); Technology (Microsoft, Apple, Intel); Pharmaceuticals (Pfizer, J&J, Merck)…you get the idea.

Yes, they are boring but they spit out regular dividends, raise their dividends annually, and give upside potential on their common shares. Short of private placements or insider trading that’s the best deal in town given the amount of risk assumed.

Just like I leave room in my closet for a few sizzlers, I carve out a small percentage of my portfolio for excitement. So far my choices have always done well in the long-term but with lots of volatility in the short term.

It’s wise to remember the words of investor George Soros: “If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.”

I never wore the pink chiffon dress. The next day, overcome with buyer’s remorse, I went back to the vintage shop to return it. The manager put up a good fight but, in the end, she took it back. Feeling immense relief, I put the money back in my wallet and soon found some other stupid thing to buy.