With so many opinions in the media and from investment professionals, investing can become very confusing. We often forget about the simple principals that have made investors successful over the last 100 years through both rising and falling markets.  Here are a few!

Avoid self destructive behavior:

Individuals who cannot master their emotions are ill-suited to profit from the investment process.

[Benjamin Graham, father of value investing]

Over the 20 years to 2007 (nothing has changed in 2016) on average investors missed out on two-thirds of their potential return over this period.  Why?  Because they let their emotions drive their investment decisions.  This is best explained as the behavior gap by Carl Richards.

Investor return

Don’t attempt to time the market:

Far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in the corrections themselves.

[Peter Lynch, legendary investor and author]

Over the 20 years to 2009 the investor who missed only the best 30 trading days out of the 5,240 trading days in this period, saw their return reduce to 3.39% from 9.48% for those who stayed the course!

Be patient:

The market does not beat them (investors).  They beat themselves, because though they have brains they cannot sit tight.

[Jesse Livermore]

Investors who stick to their strategy and investment time frame are rewarded because over the longer-term, the true underlying value of a company is likely to be acknowledged by the wider market, benefiting those who stuck with it.

Don’t let emotions guide your investment decisions:

Be fearful when others are greedy.  Be greedy when others are fearful.

[Warren Buffett, Chairman, Berkshire Hathaway]

This concept is best explained with Carl Richard’s sketch below.  So true!

Fear and Greed Disregard short-term forecasts and predictions:

The function of economic forecasting is to make astrology look respectable.

[John Kenneth Galbraith, economist and author]

This lesson has been so true over the last 5 years.  During periods of uncertainty, investors gravitate to the investment media and news for insights into how to position their portfolios or for opinion around which asset class to invest in.  Don’t be tempted to jump to the next best philosophy.  Stay true to your goals and investment time frames because that should have been the reason you invested in the first place.

Stay tuned for the Youtube channel – Wealth Elements University starting soon! I will be covering the important things you need to know about money. I will be focusing on the topics that affect all of us. If you are human and you earn money, this is for you.

Dean Van Zyl [Personal economy consultant]

Source: All Ordinaries, Perennial Investment Partners.


This article does not take account of your personal circumstances.  Before relying on it to make a decision, you should consider how it applies to your circumstances or talk to us about our process for personal advice.