Hack your investment behaviours

Apex Advice talks about blocking out the noise around market volatility

[Video and edited transcript below]

Apex Advice Director & Senior Financial Adviser John Manserra provides us with a quick update about investment behaviours following recent market volatility.

“Hi all, with all the doom and gloom out there today and the last few weeks when it comes to investing, I thought I’d just touch base to go over a few key concepts. As you will have heard me bang on about over time, it’s important to try and hack your behaviours and not panic.

“At the moment, with everything happening in the world, we’ve got UK stimulus, US fears of a recession, we’ve got Vladimir over in Russia doing what he’s doing and the geo-political things that surround that, this is all creating a really big melting pot for volatility and a point of maximum fear.

“And, as the great man Warren Buffett says, ‘Be fearful when others are greedy, and greedy when others are fearful.’

What does it mean to ‘hack your investment behaviours’?

“We need to get through our minds this concept of ‘time in the market’ not ‘timing.’ That is, buying good quality assets and staying invested versus trying to move to and from cash, reacting to the noise. And you can see here (image below) that people that try to do that, their annualised returns over long periods do get diminished significantly.

There’s a big difference between speculating and investing. Speculating is ‘I’m going to pick and choose when I go to cash or stay invested, or over what assets to buy’, versus picking good quality assets, buying them and letting them do their things over time. Ideally, if you’ve got capital available to buy at points of maximum fear, which is where we’re sort of approaching now.

You’re going to see more of this sort of stuff, ‘markets mauled’ media in your face about investments going backwards. Again, we need to get our head around the concept of time in the market and not timing, and not react like everyone else by trying to sell down good quality assets at low points, and we need to hack our behaviours and don’t let the media play their role in making you fearful.

This one (image below) is just to get through your mind around taking a zoomed out approach, and what we can see from the early 90s all the way through ’til 2022, if you look at this section here we can see multiple events which have created points of high fear. We’ve got terrorist attacks, Bali bombings, dot com bubbles, all the way through to GFC, tsunamis, oil spills, you name it… even Brexit and COVID19, they’re all sort of blips on the radar now, so what we need to do is take a timed out approach, buy good quality assets, and let them do their things over time. If you want to discuss your portfolios at all, please feel free to get in touch.

Source: Vanguard

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