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Back to News Diversification helps ALLAY fear as uncertainty rules the market.
Overcoming trepidation about investing is necessary as uneasy times are not unusual.
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Diversification helps ALLAY fear as uncertainty rules the market.

Overcoming trepidation about investing is necessary as uneasy times are not unusual.

 

Our clients know that when they invest through us we encourage them to not only invest in one of our Fund of funds (which are properly diversified in top equity Unit Trust), but also into our other two Fund of Funds of which one is invested in top South African Hedge funds and the other in top offshore hedge funds, which do not only diversify the investments of clients, but diversify these investments amongst three of the major asset classes.

 

“There is only one way to deal with fear” says Adam Zoll at Morning Star. “Serious diversification both in regards to assets and asset classes”, but as he points out, while that may make things a little less scary, “it won’t get rid of the bogeyman in the mirror”. What you probably need to be most afraid of is yourself.

 

The greatest risk now maybe is to succumb to your fears and change your portfolio from a winner to not-so-good or much-worse.

 

Fomo, or fear of missing out, is a pervasive apprehension that others might be having rewarding experiences from which one is absent. Here is a great example of Fomo in action from the book, “Bull: A History of the Boom and Bust, 1982 – 2004 written by Maggie Mahar:

In Florida, Ed Wasserman took the bait only at the very end of the decade. In the spring of 2000 the 50-year-old business writer finally broke down and invested in a hi-tech fund. “By disposition, I’m a value investor,” said Wasserman.

 

“I had a lot of scepticism, but finally, I succumbed. In the spring of 2000, I went into my local brokerage firm and said to these guys: ‘Why did I only make 12% last year when other people are making 40%.’ And they said, ‘We have this very aggressive fund.’

 

“This aggressive fund that my broker is offering puts me into companies like Quest, Oracle, Cisco – these aren’t little companies with small revenues - they’re blue chips. So I buy in. It was March of 2000.”

 

That month, the Nasdaq began to crater.

“I lost two-thirds of the money” said Wasserman.

 

Friendly greetings

 

Andre Delport

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