There were few places to hide in the poor market performance of 2018

The shortest route from A-B is always…
January 25, 2019
are you taking care?
April 18, 2019

Dear Driensie

You don’t need to flip through the back pages of your morning paper to know that 2018 was a tough year – it’s almost a billboard slogan. The severe under-performance has been the hottest news on most lips because 2018 had the worst returns in 110 years but in January this year, there was an upturn in the SA markets – seeing the best returns since 1983.

We can dress it up how we want, Ramaphoria or Ramageddon, Trumponomics, Brexit or trade wars with China; but, as investors, we cannot be blamed for our wide-eyed stoicism. It’s painful to see our Jan 2019 numbers drop below our Jan 2018 numbers. We’re not alone, there were few places to hide in 2018 (SA Property had a particularly difficult year!).

As we look back, we need to avoid recency bias. This means that we see the recent performance as more important than the bigger plan and it’s unbalanced, but it?s our natural reaction. Rather than a knee-jerk withdrawal, we need to stand fast and press on.

What we’re currently seeing is a re-alignment of industry expectations and more realistic forecasts. Essentially, we live, we learn and we keep improving.

The pearl that we extract from this crushing experience is this: spending more time invested will always yield the best returns. We mustn’t be blown off course by a white squall – we need to stay our course.

As Warren Buffet says: “Be fearful when others are greedy and greedy when others are fearful.”

If you’d like to chat about your investment strategy or how the 2018 economic performance effects your day-to-day, then let’s have a chat!

Best regards
Dave Fisher

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