InvestNow News 13th Sep – Fisher – Ghosts and Ghoulies and Spilt Milk

Frank Jasper – Chief Investment Officer – 04 September, 2019

There were plenty of things that went bump in the night in August. When that happens deciding whether it is a temporary ill wind or a more serious “Ghostie”, to borrow from the well-known poem, is one of the keys to long-term investment success. I share some thoughts on how we go about separating the two.

“From Ghoulies and Ghosties, and long-leggity Beasties, And all Things that go bump in the Night,  Good Lord, deliver us.”

There was too much interrupted sleep in August with frequent bumps in the night. The “bumps” ranged from big picture global concerns to a couple of poor results from key investments in our portfolios.

Difficult markets and difficult investments pose questions that demand answers. The most important question is whether things have fundamentally changed for the worse, or is the bad news just a short term blip?

Getting that answer right is critical. If things have fundamentally changed then exiting an investment or changing our exposure to an asset class might be the right call. If the bad news is a short-term blip then being brave, looking through the bad news, and adding to a position is often the right decision.

Over a savings lifetime difficult markets tend to be blips rather than permanent features

Much of the news dominating headlines in August was about the broader economy or socio-political concerns. Trade wars, protests in Hong Kong, massive spikes in Argentinian bond yields and the ongoing Brexit negotiations, all fit into this category.

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