It\u2019s the best of times, it\u2019s the worst of times, as Dickens might have said. At every conference and around every braai, South Africans are being told that everything\u2019s going to the dogs.<\/p>\n
Meanwhile, the same South Africans are relentlessly being told by the investment space that now is a great time, because opportunity is rife when most people are scared.<\/p>\n
It can feel a bit like being the flag in a tug-of-war game. So, we\u2019ve pulled together a few thoughts to help keep your sanity intact in this most, well, interesting of times.<\/p>\n
Outlook 1 – Value isn\u2019t a place, it\u2019s a period<\/strong><\/p>\n First, the good news \u2013 investors of the Warren Buffett philosophy of \u2018sell when people are smiling, buy whenever everyone\u2019s terrified\u2019 have plenty to sink their teeth into. As Allan Gray noted recently, household name stocks like Apple and Netflix are currently overpriced, while just about everything else is really cheap to buy.<\/p>\n There is ample evidence to show that buying undervalued stocks at an uncertain time and holding on to them for a long time works. The current market or devaluation of certain stocks now really doesn\u2019t matter very much.<\/p>\n In wealth creation, plenty of studies show that it\u2019s not about who is currently winning the game but rather how long you\u2019re in the game for.<\/p>\n Allan Gray\u2019s Orbis Global Equity Fund, for example, has outperformed by an average of 4 percent, year on year for 29 years. However, this is an average \u2013 the fund underperformed several times in that period, sometimes by more than 10 percent. Yet those who\u2019ve hung on since 1990 will find their stock worth triple its value when compared to investing in the benchmark for the same duration. This shows the shortfalls of following trends and changing allegiance too often in the investing game. In other words; it can be the best of times when markets seem like the worst they\u2019ve ever been.<\/p>\n Outlook 2 – Investment growth tends to be non-linear<\/strong><\/p>\n This outlook is in direct contradiction to anything you\u2019re likely to hear around a braai. \u2018My investment was worth X in January, it\u2019s worth this much less now,\u2019 most people fume. Or, they\u2019ll ask for a fund\u2019s performance figures in the past twelve months.<\/p>\n Most seem to think of it as a game of chess \u2013 you move forward one step or backwards one step, depending on the strength of the pieces in your arsenal, and whoever\u2019s moving forward most is winning. This is like saying Autumn \u2018wins\u2019 over Summer come February \u2013 it fails to take into account the cyclical nature of markets and investing.<\/p>\n In this way, it\u2019s safe to say that the investment game is frustrating and frightening if you don\u2019t know the steps. Rather than chess, investment is more of a Foxtrot, and almost always works in a \u2018two steps forward, two steps back, one more step backwards, one lateral shift no one quite understands and then four forwards\u2019 pattern. It\u2019s advancement, but not linear advancement. Look at nature. Where do you ever see organic growth being linear?<\/p>\n See for yourself which outlook works, but remember to always take full advantage of whatever \u2018times\u2019 you find yourself in.<\/p>\n (Source: www.allangray.co.za)<\/p>\n","protected":false},"excerpt":{"rendered":" \t\t\t\tIt\u2019s the best of times, it\u2019s the worst of times, as Dickens might have said. At every conference and around every braai, South Africans are being told that everything\u2019s going to the dogs.\t\t<\/p>\n","protected":false},"author":1,"featured_media":3190,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12,27],"tags":[],"class_list":["post-3252","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","category-market"],"yoast_head":"\n