Why Time in the Market Is More Important than Trying to Time the Market
With the JSE All Share reaching 60 127 this morning (29/08/2018), it is valuable to revisit some basic principles that make for successful long-term investment strategies.
Indeed, it is easy to forget that in April this year the JSE All Share dropped to 54 602 (4/4/2018). This fact highlights the inherent futility of trying to time the market.
I have mentioned this in previous articles “Staying Invested Vs Timing Markets”. In short, it is always better to stick to well thought out investment strategies and to avoid emotional reactions to negative market movements.
The graph below is a powerful illustration of why time in the market is more important than trying to time the market! (click on the graph to enlarge)
A Brief Look Back at the 2nd Quarter, 2018
Halfway through a rather turbulent political year, domestic asset classes are starting to reveal that the Ramaphosa-led government is facing significant headwinds. Although a tough budget stance managed to stave off a credit rating downgrade, there is still a long way for the local economy to go before investors can rest easy…
Why Local Investors Need to Stay the Course, Despite Low Returns
Stagnant market calls for a cool head…
Over the past three years, most SA investors have been disappointed with their returns. This is unsurprising, given the figures. For example, the average SA Multi-Asset High Equity unit trust did 3.4% per annum over the three years ended March 2018. Overall, the available asset classes have delivered poor returns, as can be seen in the table below.
Expected Asset Class Returns
Below find a graph prepared by Coronation Fund Managers on expected asset class returns and inflation for the next 10 years. This is an updated graph on two previous articles “Looking ahead at Markets and Inflation” / “Expected Asset Class Returns over the next 10 Years”
Why Cash Can Be the Riskiest Asset of All
I have mentioned on this blog before that timing the market can be costly “Why Timing the Market Can Be Very Costly” and why it is better to stay invested rather than trying to time the markets “Staying Invested Vs Timing the Markets”.
In this Moneyweb article, Patrick Cairns argues that cash can be the riskiest asset of all because one needs to be exposed to higher growth assets such as equities and listed property in order to produce inflation beating returns “Why Cash Can Be the Riskiest Asset of All”.
The Problem with Cryptocurrencies
Cryptocurrencies like Bitcoin and Etherium (see article “Demystifying Virtual Currencies”) have generated a great deal of interest because of their spectacular gains (and losses). Investors are trying to determine if cryptocurrencies are an investment opportunity, a bubble or the end of money as we know it. In his considered and detailed report Brandon Zietsman, CEO of PortfolioMetrix, argues that when investing in cryptocurrencies one needs to be clear-headed about the risks (a view with which I concur). Click here to read the article.