It is sad to see the JSE All Share index back at the level on which it started this year. It is frustrating to see this lethargic equity market; almost like always choosing the wrong cashier’s queue at the supermarket or slowest lane at a robot. It sometimes feels as if it is only happening to you, as if every choice you make is the wrong one. This sentiment is also felt in the investment world, where an investor believes he or she just cannot get it right (picture below). But, contrary to popular belief, the universe is not conspiring specifically against you. Markets are merely the net result of the interaction between millions of buyers and sellers.
Over the shorter term, sentiment does influence the price investors place on a specific asset class, but over the longer term, the actual value of an asset class will float to the top. There are times when a specific share, sector or country falls out of favour and takes a long time to regain lost ground, if ever. But for the most part history has shown us that asset classes have specific return profiles (see below), and we only need to be patient for the risky ones to come to the party.