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