Former banker, now author, blogger and speaker
Includes shares in the Big Five Canadian banks, BCE Inc., Rogers Communications Inc., Onex Corp., Loblaw Cos. Ltd., Canadian National Railway Co. and TransCanada Corp.; low-cost U.S. equity ETFs and short-term guaranteed investment certificates.
Throughout much of his banking career, Larry Bates led teams of professionals tasked with floating new bond issues for governments, corporations and other entities. Now, he is an author, blogger and speaker "focused on promoting investor literacy."
How he invests
High transaction volumes are seen as good by the financial industry because of the commissions and fees generated. But when it comes to his own portfolio, Mr. Bates takes the opposite view: Transactions can trigger costs that cut substantially into his returns.
"I believe the lower the trading activity, the better the result," he remarks. "I don't try to time the market or day trade.
"In fact, I often go weeks, or even months, without checking my portfolio because short-term swings don't matter much," he adds. "I do sell stocks, but only rarely."
To further minimize costs, he uses an online discount broker. He also owns stocks directly or through low-cost index funds instead of mutual funds.
Mr. Bates also keeps stress levels low when investing. He largely ignores "short-term market noise" when building up positions. And he has only modest positions in resource stocks: They are cyclical and quite volatile, so underweighting them "makes for a smoother over all ride" that helps him stay invested.
It was "being a long-term optimist" and not selling any stocks during the 2008 global financial crisis. "Most of my positions are 300 per cent to 400 per cent higher than the lows, and have paid generous dividends throughout," he says.
It was allowing short-term risk avoidance to drive decisions during his early investing years.
Mr. Bates recommends minimizing investment costs as a way to enhance returns. To help promote awareness of costs, he has set up wealthgame.ca.
Costs can add up over the long run, as the "T-Rex Calculator" on his website shows. For example, a portfolio with an average annual compound rate of return of 6.4 per cent over 25 years keeps only 57 per cent of its gain if annual fees are 1.75 per cent of the portfolio's assets.
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