In a recent article from Coronation, they address an important issue of investing through “the cycle” i.e. the market’s ups and downs which are driven mostly by good and bad economic times. Markets are driven by emotion in the short-term and fundamentals in the long-term. Here is a summary below:
Caught in the cycle
- The successful investor will almost always be the one who has the courage, the patience and the discipline to understand to look through the cycle.
- Do not let emotion in the short term offset your long term strategy.
- Stick to your guns when you are underperforming and know it could be a long time before things turn – the upside is enormous.
Coronation’s current views:
- It is unlikely that listed property will repeat its stellar performance we have seen over the past decade (in the last decade investors have doubled their capital every three years).
- We have bearish views on bonds (local and global) & believe current yields do not compensate investors for the risks brought about by the large amounts of debt in the global system.
- Domestic equities are no longer cheap and that now is the time to be cutting exposure, not increasing it.
- Global equities currently offer more attractive valuations than local equities. Now is the time to buy, especially as the rand is strong.
To view the full article, “Caught in the cycle” by Coronation please visit our website under the section ‘fund manager comments’
