Approximately 18 months ago, I started looking at purchasing shares in Saputo. Saputo makes cheese and they do it quite well with operations in Canada, United States and Europe. It is a consumer staple stock- a nice, safe, recession proof stock paying a steady dividend.

The thing about cheese though is that it is subject to quotas- i.e. government regulation- and Saputo was going through a series of regulatory challenges on the price it could charge, how much it could sell etc. etc. So, I looked and looked and looked and never bought it. This week, the State of California issued a very favorable ruling for cheese makers and Saputo’s stock shot up. Saputo stock is up over 20% this year- pretty good considering how the year is going for stocks. Now, I turn green like bad cheese every time I read positive news about Saputo.

What happened? I simply out-thought myself and got distracted by the shiny lights the financial industry flashes. Here’s what especially gets me- I read Saputo’s financial reports for the last two years and still didn’t buy it. I started looking at all the flashy stocks the industry was touting (cheese isn’t very sexy is it?) and forgot about Saputo until it was too late.

Three lessons from this eposide.

1. Plot a game plan: Do you like dividend stocks? Passive investing? Foreign investing? Bond trading?  Get a game plan on what type of strategy you want to pursue first and ignore the product until you get a strategy in place. I was slowly working my way to a strategy of purchasing dividend yield stocks (for tax effectiveness and price appreciation) but had not gotten there yet. So, I kept focusing on product and not the strategy.
2. Stick to it: I believe it was Napoleon Hill in Think & Grow Rich who wrote the difference between the rich and the poor is that the rich make up their mind quickly and change their minds slowly and the poor make up their mind slowly and change quickly. If you believe in a strategy, apply, apply, apply and then apply again.
3. Ignore the shiny stuff: If you have to get a baby to focus on a camera, what do you do? You dangle something shiny next to the camera to get its attention and divert its focus. The same thing kept happening to me. I was getting too many reports and analysis from the financial industry. I kept getting distracted by oil and gas, gold, REITS- I lost the plot (as the English like saying) through information over-load. I think this was my fatal flaw on not buying Saputo. The strategy was coming into place to buy dividend yield stock but I got distracted and forgot #2.

I am working on some rules to keep to these lessons which I will share with you but if there is one thing you should take from this post is that sometimes having too much information is a fatal flaw in investing. Slow it down and focus on a few factors that fit into your strategy. Hope you avoid my mistake.

This post is an entry into Canadian Capitalist’s three year anniversary contest. Check it out and, speaking against my own intersts, enter as well. Congrats Canadian Capitalist on your milestone. Many happy returns!