Dear readers,

Gold at US$4,000, the JSE hitting new all-time highs and NASDAQ valuations reaching eye-catching multiples. Even Bitcoin is getting in on the act trading at over R2 million. While all this indicates that investors have been enjoying a great run, it also means that there is some naïve investment behaviour emerging. I recently heard of cases in which both old and young investors were mortgaging their property to buy into the market and in one case a person sold their home to buy gold.

In over thirty years of wealth management, I’ve witnessed and experience bull and bear runs, bubbles and bursts, “irrational exuberance” and global financial crises. Reflecting on the current trends, I found the US Securities and Exchange Commission had some sober advice that is worth considering here in South Africa. I quote from a few lines regarding this new phrase, “Fear of Missing Out” or FOMO:

As you make investment decisions keep this phrase in mind, “NO GO to FOMO.” The best way to protect yourself during market swings is to create an investment portfolio that has a mix of assets such as stock, bonds and cash. Including different kinds of assets in your portfolio reduces risk and the impact of volatility on your overall portfolio.

It’s also important to diversify within an asset class, such as not putting all of your money in one or two stocks. Instead, spread it across different industry sectors. That way, if you want to dabble in a “cutting edge” investment that may experience a lot of volatility, you might be better protected against a downturn. Our phrase, “NO GO to FOMO” even applies to trying to time the market. It’s time in the market that counts, not timing the market.

Simple, but smart advice and remember that as a Warwick client you have your own Wealth Specialist dedicated to providing you with balanced and professional advice.

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Go on, why not show your support and make a pledge today confirming your participation - you can do this here:

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Until next time, take good care.