Bank of Montreal’s (ticker: BMO) first quarter results exceeded analyst expectations. Starting from the depths of the market crash about a year ago, its stock has roughly doubled. In one way, my investment in BMO says good things about my investing temperament, but in another way, I was just plain lucky.
I owned BMO before the market crash, and bought more a few times while the stock price was low. The ability to ignore doomsday predictions and invest in an asset whose price is low is an important skill for investors.
However, the fact that I happened to lock in on BMO for a big bet and ride its ascent is mostly just luck. Fortunately for me, the recent good news about BMO business performance means that my bet isn’t likely to go south too soon. As much as I’d like to believe that I have some great stock-picking skill, I don’t believe I do. BMO could just as easily have continued drifting down in price for all I knew at the time I invested.
For this reason, I plan to continue my slow but steady transition from owning individual stocks to owning low-cost index ETFs. In the future, I plan to show my composure by adding new money to whichever ETF has had the worst recent performance rather than choosing an individual stock that has been hammered.