We don’t like to talk about markets very often because what they do is beyond our control. Unlike others, we also do not claim to know where they will be in the following days, weeks, months, or years. Years, yes, in years, the markets will go up, but that’s another story.
This year’s market movement deserves a mention because it is one of those times when even the most patient investors can be tested. As the graph below illustrates, if an investor behaved badly and looked at the market daily or weekly, they would have experienced every emotion possible so far this year.
From euphoria after the new year of being nearly 10% up in the first 2 months to helplessness at the 10% drop the following 2 months. Today, after almost 8 months of ups, downs, and sideways movement, the JSE are around 2% up.
Consider all the wasted and needless stress that the undisciplined investor goes through by simply not controlling their behaviour?
You may say, “Well, it’s my money, and I need to know what’s happening”. While that may be true, the reality is that watching and worrying will not give you better returns but WILL give you more stress, which affects you and your health daily.
One way to avoid this fruitless behaviour is to make sure that you have an investment strategy that you understand and that this strategy is directly linked to your lifestyle plan. This should have been done upfront with your adviser and should need minimal fiddling if done correctly.
Unfortunately, we get used to having all this information in the palm of our hand. Whether on an app like 22seven, where we can check our balances across all institutions at any time of the day, or just by logging on to a provider’s app, this behaviour can become a part of our daily routine but does not serve us.
It’s like checking on a marathon runner’s position every 100 meters.
The less you look, the smoother the ride. That same graph over 3 years looks quite different, with a +32 % return.
I have used the JSE in this example, but the same principle applies to the world markets. Focus on what you can control and let the great companies of the world do what they do. GROW.
Dirk Groeneveld, Certified Financial Planner
t. 083 261 9287
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