Trading through a tornado

There really are no new pearls of wisdom during times like these, says EasyEquities’ head of marketing, Carel Nolte. None. However, he tells Currency, there is one, big message that remains consistent: stick to the basic behaviours of good investing.

In case you need reminding – or if you’re new to what Warren Buffett has called the “psychotic drunk” that is the market – Nolte offers the following advice: 

• Don’t panic! Take a breath, have a cup of coffee and consider why you invested in a share in the first place.  
• If the fundamental reasons have not changed, don’t panic sell.  
• Don’t fall into the mental trap of thinking you can impact and change global markets.  
• Remain disciplined, stay the course, set up those recurring investments and step away. 
• Long-term investors who avoid panic are better positioned to reach their goals and benefit from future market recoveries. The longer you stay invested, the better your chances of meeting your long-term goals.
• Consider buying more of your existing holdings. If you liked them a month ago, you’ll love them more now at a discount. Volatility equals opportunity, and your favourite stock just got cheaper. 
• Rand/dollar-cost average over time to lower your risk. This can be daily, weekly or even monthly. 
• Diversification helps reduce the impact of market downturns. Consider adding defensive, high-quality dividend-paying stocks, and government bonds to your portfolio. 
• It’s about time in the market … not timing the market! 
• The sun rises in the east and sets in the west. And markets always move in cycles – booms, busts, panic, euphoria. Remain calm and stomach the deep drawdowns, because your reward may well be the 10x moments. These are the times when wealth is built – not when everything’s green. Play the long game. Your future self and your future generations will thank you. And remember, bear markets have historically been shorter than bull markets. 

In the spirit of sharing the wisdom in the madhouse that is the moment, check out the EasyEquities blog site, where you’ll find more on investing in uncertain times.