We’re a motley crew: young and old, left and right, seasoned investors or taking our first foray into the markets. But we are all united by the singular desire for financial independence. Learning from each other's experience gives us the confidence to manage our money confidently in uncertain times.
Perhaps we’re just a little too good at forecasting markets, or we have a crystal ball, but the decision to move the conference from October 2021 to February 2022 ended up serendipitous one way. It plopped the event smack in the midst of market turmoil, just as investors want insights and analysts want to provide them. As Adam Jones, the agenda designer at the show, I wanted as diverse an array of opinions that I could get, but as I watched with my investor hat on, I realized just how ambiguous it was. All of them can’t be right, can they?
Sadly, at the moment there is room to question everyone. The bubble criers may have been right this time, but have they been wrong long enough to stop paying them attention? Inflation was temporary, except now it’s not, and what people are talking about. With Hamish Douglass, a trusted figure, unable to read markets since the covid-stockmarket bounce, and the sudden exit of equities in China, there is also some questioning whether investment managers are embedding risk sufficiently while excitedly talking up growth stories.
I would like to be able to give you a magic formula or the person that makes the right decision at the right time, every time, but it doesn’t work like that. Investing is not straightforward; it involves taking on (calculated) risk, making mistakes, and getting a little lucky. And, as my colleague Lewis Jackson showed last week, timing the market is famously difficult and you can easily miss the best months if you can’t guess the right time to re-enter.
The one thing I can tell you is that the people on stage are focused on the investment and you are focused on you. Asset allocation can feel hopelessly black-boxy, but as Christine Benz, director of personal finance, points out, your human capital should be in sync with your financial capital. According to her, when young, and awash with human capital, the long-term horizon enables aggressive investment (as aggressive as you can handle), as you are not likely to need to dip into your investment portfolio for living expenses for a long time to come. You can take more volatility, and that means more stocks. Now, as you get older and closer to drawing on your portfolio, you always want to make sure your portfolio has upside, but you also want to gravitate towards safe investments because my goodness you never want to be in the position of taking from investments while they are dropping. As one viewer, Mavis, wrote yesterday: “I’m 90, nearly 91, what is long-term investing?”
Over the coming year, there’ll be no shortage of experts stepping up to proffer their views. Then listen to the independent analysis that is coming, but remain sceptical of all but the firmest of claims in this regard, and ultimately focus on you and what works for your career. As Graham Hand writes in Firstlinks this week, “the cost of participating in the long-term gains from equities is the short-term prospect of price changes that are greater than inflation. You’re only going to know if you have the temperament to remain in the heat of the market selling off.”
We hope that we can once again all be together in person later this year, Covid-willing.
It would be difficult to have missed the news about Facebook parent Meta this week, taking a 26% plunge in one day and was more than US$200 billion from its market value. Read this and more in our weekly news roundup.
The end of one event is the beginning of another
Welcome to the 2022 half-yearly reporting season. In the coming month, Australia’s largest listed firms will disclose how a covid-ravaged second half of 2021 has played on earnings. Stay abreast with our reporting season calendar, plus analyst's insights on the results for Premium subscribers.
