While some cook with a dash of this and a dash of that, the best chefs follow a recipe to a T. Without abiding by a set of instructions, you’re at risk of inconsistent results or worse, omitting steps altogether. Sugarless baked goods rank right up there with eating cardboard. And too much of even basic spices can ruin any dish. Overcooked foods can be dry or burnt. Undercooked foods can cause illness. Clearly, following a recipe precisely is essential.

Similarly, an oversight in investing can have ruinous results. Establishing the wrong asset mix can set an investor back many years. Overlooking operational issues, financial problems, overvaluation, or liquidity constraints, can result in poor security selections. A disciplined approach can assist in mitigating these risks.

Everyone’s Tastes Differ

Some prefer their meals bland whereas others desire spice. Some like dishes served hot while others prefer them cold. With food, people usually know what they want and how they want it. Investments are much trickier. Choices are often more complex. Not to mention that investing environments can differ widely depending on things such as economic outlook, inflation levels, interest rates, valuations, or tax rates. Many investors are even unsure of what they want or need. And market movements often wrongly influence investor psychology. They’re fearful when they should be greedy and vice versa.

As one should, we always begin the investment process with an asset mix discussion. All else being equal, stocks should be emphasized. Stocks provide the highest returns over time and their after-tax returns are more favourable. But, many investors have income requirements, low thresholds for volatility or short-term needs which drive objectives toward income investments.

Shopping List

Though a winter tomato certainly doesn’t taste like a summer tomato, preparing for a meal starts with a specified list of ingredients. The investment analogy is the securities held in one’s portfolio. The choices are ever-changing though, depending on the opportunities presented in the marketplace. And much like shopping for produce, we must be discerning—examining companies which are often blemished to ensure they aren’t rotten to the core.

Recipes have been likened to culinary road maps. At Generation, we have our own defined processes, including specifically designed tools such as TECTM, TRIMTM, TRACTM and TVMTM, to guide us. And like recipes that get handed down from generation to generation, we’d like nothing better than to pass along our processes to future generations—both ours and yours. 2