Five minutes with Dale Gillham

Published in the Investor Magazine, October 2014

Investor: Wealth Within is very much about educating investors of all levels, what’s one of the many questions you’re asked by first time investors?

Dale Gilham: We teach everyone from beginners to full time traders, and it’s surprising how both groups often have similar questions. The common ones are almost the same question but include everything from ‘How do I find stocks to buy?’ to How do I buy and sell? 

The answer to all of these is the same, first gain the right share trading education knowledge and then develop their skills.

Investor: For many investors, fear plays a big part in whether or not they dip their feet into equities; why do you think this is and how do you overcome this fear?

Dale Gilham: As was once said “knowledge is the enemy of fear”. 

So firstly, empowering people with the right knowledge is critical; however we find that we need to support them in the early days to implement the knowledge, which in turn reduces the fear. 

Like anything in life, the more you do something the more you get comfortable with it and the less fear you have.

Investor: When investing in equities what are some key things we as Investors should look out for?

Dale Gilham: There are a multitude of critical things I could mention, however to me it is important to only invest in high quality assets that have capital gain and income, never invest just for a dividend yield, and always protect your capital by having an exit strategy, by which I mean always use a stop loss (stop losses are a form of protection that can be placed to protect against adverse movements in a stock or derivative).

Investor: Other than stocks and shares, what other investments do you find attractive at the moment?

Dale Gilham: In terms of investment, for me there are really only two areas for investor’s, that being property and shares, and they are both looking good at the moment. 

Cash products such as term deposits, bonds and the like are really only safe havens to park money when the risk of other investments gets too high.

Investor: Your bestselling book ‘How To Beat The Managed Funds By 20%’ has helped a lot of people over the years, what’s the key point that investors can take away from the book, or learn from it?

Dale Gilham: You are correct, the book came out before the GFC and I know those who followed the strategies in it were very appreciative as they avoided the carnage. 

In essence, protection of capital and not following the heard is the key point re-enforced throughout the book. Too many investors have the ‘set and forget’ attitude, whereas active investing has proven to be far more profitable.

Investor: Many Investor subscribers are new to investing and trading, what would be your one piece of advice for people starting out in equity investing?

Dale Gilham: I get asked this a lot from those new to the market, and the majority choose to ignore the advice as the answer is simply to get an education. 

I suspect they think that I will give them this one little piece of information to have them picking only winning stocks, however the market does not work like that as it rewards those who understand it and punishes those who don’t. 

In the share market your education will cost you one way or another. Some people spend years learning the hard way.

Investor: What’s your overriding philosophy that you enter every trade with and why?

Dale Gilham: Regardless of the type of trading, my number one philosophy is that I should always take the lowest risk trade possible and in doing so protect capital. Basically, if I put in place strategies to manage the downside risk, then I can let the upside run. Keep it simple.

Investor: Finally, it’s wrong to get sentimental about stocks, but sometimes you can’t fight it, so do you have a favourite at the moment?

Dale Gilham: You are correct. To me a stock is just a stock, and getting sentimental only results in mistakes. 

What’s my favourite stock now? I don’t really have one, that said there are a lots of really interesting companies like Myer, Stockland, Paladin, Asciano and Wesfarmers to name a few.