Out of Adversity comes Opportunity

Out of adversity comes opportunity

Benjamin Franklin (1706 – 1790)

If you only read the newspaper, you’d probably consider putting your money under the mattress and leaving it there. Whether it is the US sub prime crisis threatening a recession in the US, the fallout from finance company collapses in New Zealand or the latest decline in share markets, the news in investment markets has been nothing but negative of late.

The natural reaction to this if you have money invested in the assets affected is to simply go into your shell and put your money in seemingly safe places like the bank. And that’s natural. If you get burnt doing something, the instinctive reaction is to do something else.

So, why is this the last thing that you should do?

1. Over the history of the capitalist world, it has consistently been proven that investing in companies who are growing their earnings (i.e. shares) provides the highest returns (albeit with the highest amount of volatility) over the long term.

2. It is likely that you have a portfolio individually designed by us according to your risk profile as well as your goals and objectives. Have any of these really changed?

3. Long-term decisions based on short-term performance are invariably poor.

4. If you were looking at an ideal time to buy anything, wouldn’t you rather do this when prices are lower, rather than higher?

5. Globally, while there could be further volatility in financial markets, companies are still making money. Remember, as you pay your Telecom bill, buy your AstraZeneca inhalers and drive home in your Toyota, that many global companies remain in good shape.

6. Brazil, Russia, India and China (the BRIC economies) will be driving a lot of the growth going forward (so we’re not as beholden to the fortunes of the US).

7. If the events during and since the second half of 2007 prove anything, it is that properly diversified portfolios have never been so important.

8. And, don’t lose sight of the quote shown above from Benjamin Franklin, because the best time to buy is often when things look choppy.

Now, you can’t control the markets and how they affect your portfolio. But you can control how you react to them. We know that it is different when it is your own money, but believe us when we say that over the long term, sticking with a disciplined and agreed upon investment strategy is likely to produce the best results for you.