Investing during uncertain times: KEEP CALM AND TAKE A LONG-TERM VIEW

Published:June 11, 2020 | YOU!, Finance 理財視野

It’s been a tough year for Hong Kong. Between Covid-19 and political unrest, there’s a lot of uncertainty.

Like many others, my family decided to leave Hong Kong in 1997. Properties sold during that mass migration have since gained millions in value. The people I know who bought during hysteria times are now worth many multiple millions.

I’m not predicting a recurrence but selling during a crisis is a common theme. One that’s worth avoiding.

While I recently scooped up slumped stock of a certain unnamed mousy theme park conglomerate, I watched in awe as multitudes of men lost their pants and had to be persuaded against selling their entire retirement portfolios. Some of which had at least 20-40 years before cashing in.

Panic makes people lose perspective.

I’ve seen it before during multiple crashes and have developed a strategy as a result.

The key is looking far ahead to avoid getting a bad bout of myopic loss aversion. (Which is a fancy way of saying ‘hysterically losing your pants and making stupid decisions.’)

As a self-taught investor and Warren Buffet fan, I live by the teaching:

“Be fearful when others are greedy – and greedy when others are fearful.”

I also reassure myself with the fact that women are proven to have great success as cautious long-term investors.

The Warwick study shows “slow and steady wins the race” sums up the investment approach of many women, who hold more diverse portfolios and typically experience fewer losses than male hobbyist investors who analyze, fiddle, tweak and take punts.

(See: women investors less likely to dramatically lose pants in times like these.)

Even billionaire George Soros said that good investing should be boring.

So, let’s look at what’s happening from a boring, unemotional viewpoint, keeping in mind the next point of my strategy.

Remembering that stock markets have always recovered.

According to CNBC, there have been 26 market corrections since World War II with an average decline of 13.7%. Recoveries have taken four months on average. About the same amount of time it’s taken most countries to get Covid-19 under control.

Which, frankly, has felt like a lifetime… but it’s been less than 18 weeks.

Proving that time is not as solid a construct when we are under emotional stress or pressure.

So calm down friends.

Step back and take a long-term view.

We’ll get through this, as long as we keep our pants on.

“Views and opinions expressed by Mrs. Money Mindset are the solely that of the author and should not be considered professional financial advice. Any action taken from this advice is strictly at your own risk. We will not be liable for any losses or damages in connection with the use of this information, or any other information posted on this website.”

Written exclusively for WELL, Magazine Asia by Mrs. Money Mindset