Motley Fool: A promising transformation

Respected and established Canadian company Brookfield Corporation (NYSE: BN) is undergoing a major transition, aiming to operate more like Berkshire Hathaway and Berkshire’s “clone” Markel – insurance businesses with a unique focus on investing, funded in part by the premiums they collect. This approach has been highly successful for both of the companies.

Brookfield’s goal is to grow distributable earnings by 20% or more per year over the next five years. That’s a tall order, and one that investors should watch closely. If Brookfield succeeds, it will likely beat the market.

The company focuses on investing in five categories: infrastructure, renewable power, real estate, private equity and credit. These are all areas that it believes will be important for global growth for years to come. And as it has a presence in more than 50 countries worldwide, its foundation for growth is strong.

Brookfield has multiple growth drivers, including its rapidly expanding wealth solutions division, its leading global asset management business, and its strong portfolio of operating companies. Brookfield is also interested in taking advantage of global megatrends, including artificial intelligence (AI) infrastructure, giving it a long growth runway. (The Motley Fool owns shares of and recommends Brookfield Corporation. Note that there are some similarly named companies, so specify correctly if you buy.)

My dumbest investment

My most regrettable investing move was putting all our savings into growth stocks in 2021. Why? YOLO – you only live once. – N.L., online

The Fool Responds: In 2021, the S&P 500 index of 500 of America’s biggest companies gained nearly 29%, so many investors were seeing great growth from their shares. As you know, the story was different in 2022, when the market pulled back by 18%. You may have also noticed that growth stocks tend to fall harder than other types in market downturns.

In 2022, for example, shares of Apple dropped by nearly 27%, and Amazon.com shares plunged by nearly 50%. (In contrast, shares of Walmart dropped by 2% in 2022, while Coca-Cola shares actually gained more than 7%.) Savvy long-term investors aim to hang on to their shares for years, through ups and downs.

From January 2021 to January 2026, the S&P 500 gained nearly 83%, averaging annual growth of 12.8%. Since we can’t know what the market will do from year to year, it’s best to only invest in the market or in strong individual stocks with dollars we won’t need for at least five if not 10 years – and to hang on through downturns.

(Do you have a smart or regrettable investment move to share with us? Email it to TMFShare@ fool.com.)

Ask the Fool

Q. What does it mean to hold a financial adviser to the “fiduciary” standard? – E.M., Flint, Michigan

A. A financial adviser who is a fiduciary is required to make decisions or recommendations that are in your best interest, not theirs. They must also disclose any conflicts of interest and, generally, how they’re compensated.

Some financial advisers may only follow a “suitability” standard, recommending or doing whatever is suitable for their clients. That may sound fine, but what’s suitable isn’t necessarily what’s best. They may be recommending something that will earn them a sales commission, while not mentioning something better that offers no commission. A nonfiduciary adviser might even recommend the least suitable option out of all suitable ones. (Of course, plenty of non-fiduciary advisers are ethical and may serve you well.)

Registered Investment Advisers (RIAs) and Certified Financial Planners (CFPs) are among those generally held to the fiduciary standard. According to the National Association of Personal Financial Advisors, “It’s estimated that nonfiduciary advice costs investors up to $17 billion a year.”

Q. What are “bulls” and “bears,” financially speaking? – E.L., Bremerton, Washington

A. The terms refer to the optimists and pessimists among investors. A “bull” expects an investment to perform well (is “bullish” on it) and may buy or own shares. Bears, on the other hand, expect falling values ahead, so are likely to steer clear. They may even “short” a stock – aiming to profit by buying high and selling low.

Of course, while many take bullish or bearish positions, no one really knows how the stock market or any individual stock will perform over the short term. Over the long term, though, the stock market has always gone up.