There is no silver bullet in investing

The poor Brits. Their new Prime Minister, Liz Truss, resigned after a mere 44 days in office. So, after they fired Boris Johnson for having parties during Covid, they might have to welcome him back.

Ever since Brexit things have been going downhill for them, but the EU is not doing much better. The predictions that emerging markets would replace the developed markets as an investment destination also did not materialise and it is clear that the US$ is currently the only place to be.

The last two years have shown us just how powerful a market trend can be. When Covid caused the markets to sell and then wait to see if humanity would survive, not even the best company in the world escaped a severe price decline because nothing is strong enough to fight the tide. When the sentiment changed and we realized that we still needed goods and services, the tide turned and even the worst company bounced back, just to be smashed again in 2022. The lesson we have to learn is that it does not matter how clever you are and how much time and money you spend on analysing a company, when the sentiment turns against you, nothing will protect you.

So what is the solution? Perhaps the best place to start is to eliminate those things that do not work. The first one will be trying to time the market; the second will be trading in shares over the short term; and the third must be trusting the government to do the right thing. What we are left with is to manage our own expectations regarding returns; to diversify our assets; and to correlate our investments with our expense requirements.

We use cookies to improve your experience on our website. By continuing to browse, you agree to our use of cookies