What should you know?
A wise man once said “it’s not about ‘timing’ the market, but about ‘time in’ the market”.
We repeatedly remind you that the secret to investment success is simple: invest in a diversified portfolio of the world’s leading companies and maintain that position for multiple decades.
The chart below compares how a US$100,000 investment would have grown if held in such a portfolio for the past 20 years, vs moving to cash for 1 year, or permanently, at the height of the ‘Great Recession’ of 2007 – 2009:
Why should you care?
We live in a world of 24-hour news, where the financial media bombard us with 1,000’s of reasons every day as to why we should change our investment portfolios.
It’s not always easy to tune out this unhelpful noise. Often, the natural human instinct is to react.
Less informed investors often seek shelter during a perceived ‘crisis’ by moving into cash until it is over, or they greedily seek immediate riches by investing in the latest hot trend or stock that is dominating the news.
Successful investors remain patient, calm, and fully invested throughout all the ups and downs. They understand they are investing for decades, not for months or days.
In the words of Rudyard Kipling, “If you can keep your head when all about you are losing theirs”, then you have a high chance of success.
