During a trip to London Zoo, the young Christopher Robin Milne met Winnipeg the black bear. Inspired by his son’s love for the bear, the playwright A.A. Milne set to work on the character for who he would be most fondly remembered.

Winnie-the-Pooh was published in 1926, and although an unnamed bear had appeared in poems and stories of Milne’s before that date, the book marked Pooh’s first appearance. The book was followed, two years later, by House at Pooh Corner.

Winnie-the-Pooh, alongside his friends Piglet, Tigger, and Eeyore, captured the public imagination and entered the nation’s hearts. So much so, that for more than three decades, 18 January has marked National Winnie-the-Pooh Day. 

But how many lessons could the honey-loving – and perpetually trouser-less – bear possibly have to teach about investing?

Maybe more than you think. 

1. “You can’t stay in your corner of the Forest waiting for others to come to you. You have to go to them sometimes.” 

A.A. Milne’s Winnie-the-Pooh is packed with life lessons, including this gem that acts as a warning to the timid investor.

UK inflation has been on the rise for the last 18 months or so. Whether October’s Consumer Price Index (CPI) figure of 11.1% marks a peak remains to be seen, but the Bank of England’s (BoE) forecast is clear.

Inflation isn’t expected to fall sharply until at least the middle of next year, not returning to the BoE’s own 2% target until 2024.

While interest rates are rising – at eight consecutive BoE meetings and now standing at 3% – your cash savings are still effectively losing value in real terms.

Investment offers the possibility of inflation-beating returns but you need to be willing to step out of your corner of the forest and take some investment risk. In fact, in the current climate, the biggest risk might be not taking enough risk.

2. “Rivers know this: there is no hurry. We shall get there someday.” 

Once you have an investment in place, aligned with a long-term goal, be sure to remain focused on that goal.

Pooh understands the need to stay patient and it’s an important investment lesson too. 

Remember that a successful investment does not provide the highest returns in the shortest possible time but allows you to achieve your goal within a given time frame, while taking the least risk possible.

Ignore the noise of global events and domestic politics. Instead, remember that if your long-term goal hasn’t changed, it is highly unlikely your investment strategy will need to. 

3. “When life throws you a rainy day, play in the puddles.”

While ignoring the noise is undoubtedly the best approach, it isn’t always easy. That’s why A.A. Milne offers this piece of advice.

Rainy days – or periods of short-term market volatility – are going to happen. In fact, they are factored into your investment strategy and are the reason your investment is deemed a long-term proposition in the first place.

We know that markets will drop, just as we know that they will rise again. Not only that, but the periods of growth tend to be longer and more pronounced than the short sharp shocks.

It is this pattern that leads to the general upward trend we see in the markets. Don’t think of rainy days as bad, and sunny days as good, think only of days that are slightly better or slightly worse, and whatever a given day throws at you, embrace it.

Staying invested during tough times – playing in the puddles in the rain – means you’re more likely to be outside to catch the rainbow.

4. “Rabbit’s clever,” said Pooh thoughtfully.
     “Yes,” said Piglet, “Rabbit has Brain.”
     “I suppose,” said Pooh, “that that’s why he never understands anything.” 

Overthinking is the curse of any long-term investment, so don’t be Rabbit.

As human beings we are plagued by emotional and cognitive biases, many of which are subconscious, that can lead to poor decision-making and permanent damage to our investments. 

You might find that “confirmation bias” makes you more likely to believe reports that confirm beliefs you already hold. For example, a single article confirming your preferred stock offers good returns could outweigh 10 reports that state the opposite.

Focusing on just one source could mean that you also suffer from “anchoring bias”. 

Some knowledge can be dangerous, leading to “over-confidence bias”, while “loss-aversion” could see you avoiding risk at the expense of investment returns.

It’s important to take a step back and review your decisions objectively.

5. “The sun still shines, even when it’s hiding.”

There are strategies we can use to spread your investment risk. These include diversification.

This involves spreading your investment portfolio over different asset classes, sectors and geographical regions. This means that even if the sun is hiding in one region, it may well be shining in another.

It’s also important to remember that silent factors, such as the general upward trend of the market, are working with you. So too, is compound growth. 

Winnie-the-Pooh didn’t have anything to say on compound growth but Albert Einstein did, calling it the 8th wonder of the world.

Get in touch

Don’t just take Winnie-the-Pooh and Albert Einstein’s word for it. 

At Expert Wealth, our Chartered Financial Planners have decades of experience dealing with the markets and can help you to manage your investment portfolio your way. If you have any questions, please get in touch and speak to us today.

Please note

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.