As a lifelong Collingwood supporter, it would be amiss of me to write this week’s blog without referring to football. But don’t worry, I won’t bore you all with an account of every memorable moment from Saturday’s game. Rather, I hope to highlight how successful philosophies in winning sporting teams can be applied to investing. 

In AFL, and many other sports for that matter, it is widely believed that “Defence wins Premierships”. This belief is based on the philosophy that a strong defensive unit is the backbone of any great team, and a key ingredient to success. 

On Saturday, we had arguably the league’s best attacking team (Brisbane) against the leagues best defensive team (Collingwood). On this occasion it was defence that won the premiership, albeit by the slimmest of margins. 

So, what does this have to do with investing? 

Look no further than Warren Buffets 2 rules for investing. Rule Number 1 is “Don’t Lose money”, and Rule Number 2 is “Don’t forget rule Number 1”. 

These rules are based on the mantra that you should not invest in anything that has a high probability of losing money. Further, make sure your capital is protected, before searching for returns. 

At Hewison Private Wealth, our investment committee is constantly undertaking due diligence on new investment opportunities, and the first question we ask is: “Will our client’s capital be safe?”

If this question cannot be answered with a great degree of confidence, then we pass. This philosophy, together with our preference for assets that generate cash flow, are the backbone of our investment policy. 

By investing in secure assets with reliable cash flow, our clients, who may be relying on their investments to meet their ongoing requirements, are not forced to drawdown on their capital base. This strategy is not necessarily implemented with the intent of preserving capital for future generations, but rather to protect their capital and deliver returns during all market cycles. 

Reliable cash flow enables our clients to maintain their lifestyle, through good times and bad, and removes the need to sell assets at the worst possible time. This strong foundation, and defence first mentality, has protected our client’s capital for almost 40 years and delivered sustained success.