Investing, bias and timing

The year you start investing has a huge influence on your view and perception of markets. I have seen some patterns in my own family.

Many black South Africans born in the 1940s grew up watching families lose their farms, land and property through forced removals during apartheid. 

So, for my grandparents, property was not viewed as a wealth-building asset but as something that could be taken away. Experiences like that leave a lasting mark on how people think about ownership and risk.

My parents’ generation had a different experience. Many were sold “investment products” by financial institutions that were expensive, opaque and offered limited upside. 

The institutions did very well. The investors, not so much. As a result, a lot of people became sceptical of financial advisers and financial markets in general.

Then came the post-apartheid BEE era. Some participants created extraordinary wealth, leading many to conclude that wealth comes from being selected for a special opportunity rather than through long-term investing. 

Some of those schemes worked exceptionally well. Others, like African Bank, ended painfully.

There is also a generation that started investing in about 2015. Outside of a handful of global technology stocks, markets felt frustratingly slow. Many of those investors are still waiting to be convinced that long-term investing is worth the patience it requires.

And then there is the bitcoin and AI generation. If your investing journey started in the past few years, we can forgive you for thinking that every asset goes up in a straight line. Crypto, Nvidia, AI infrastructure and meme stonks – the experience has been dominated by explosive winners.

Guarding against bias

The danger is that we all mistake our personal experience for universal truth. The investor who lived through a long slump sees risk everywhere. The one who lived through a bull market sees opportunity everywhere. 

That’s why it’s important to constantly check your own biases. The market doesn’t care when you were born, when you started your investing journey, or what worked during your first decade as an investor.

The best approach is usually the simple one: own quality assets, think long term, and try not to let the experiences of one market cycle define your entire investment philosophy. 

Because, eventually, every generation discovers that markets have a way of humbling everyone.

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• Start investing before you’re ready

_{Top image collage: Rawpixel; Currency.}