It can be scary when you realise that you’ve reached a stage in life where you can look back on over 35 years of fluctuating investment markets before pausing to write a few comments! It’s also a comfort to be able to look back that far especially when I can do so to reflect on something specific.
The point of my looking back is to note two things that are true about clients of ours who could be classed as successful investors.
Firstly they have ridden the storms without bailing out!
Secondly they have been consistent investors.
In the first instance they recognize that investment is long term and spending time in the market has paid off handsomely. Secondly, they have been prepared to regularly commit further surplus capital or income to their portfolios without worrying about timing the markets. If opportunities arise to invest when there are dips in the marker then they enjoy the bonus. However if they have surplus capital when this doesn’t happen they still commit to investment. They know that time in the market is more important than timing the market.
So what has this got to do with looking back, giraffes and turtles?
A giraffe and a turtle can occupy the same space but see at different levels. They are in the same place at the same time and yet the “turtle-view” is so much different to the “giraffe view”. What the turtle sees gives him one perspective while the perspective the giraffe has is very different.
During times of global nervousness like we are currently experiencing, both economically and financially, the length of time I have been around helps me see things more from a giraffe viewpoint than a turtle’s perspective.
I feel like a giraffe because I can see back as far as my first experience of a back market drop. 1987 – Black Monday. Overnight the UK index fell by 26% The Hong Kong index fell by 45%. Everything looked black and bleak – even the weather. It prompted negative opinions like the ones captured in the quote below.
“Following the stock market crash, a group of 33 eminent economists from various nations met in Washington, D.C. in December 1987, and collectively predicted that ‘the next few years could be the most troubled since the 1930s.'” (Wikepedia)
This was just one of many turbulent times for investors. The current dip is not pleasant to witness, often because as we are going through it we are prone to see the situation more like a turtle than a giraffe.
It may be scary to think that I can look back as far as Black Monday but it is also comforting to know that what I’ve noticed is that following every dip, no matter how severe, there has been a recovery and that clients who have stayed the course have benefited from that recovery.
Disclaimer: The views expressed in this post are those of the author only and are not necessarily those of I Planning Wealth Management Ltd. All material in this post should be considered as general information only and should in no way be construed as a recommendation of a specific product or course of action. Each circumstance is different and professional advice tailored to your circumstances should be sought from a qualified financial adviser.