Last week I watched my share portfolio get hammered as markets plunged across the globe.
And in response I’m doing something I rarely do … I’m issuing a warning to all investors:
It’s time to play dead.
Seriously.
I’ll have more on the how and the why in a moment, but for now let’s dip our hat to the headline writers, who well and truly earned their peanuts last week. Take this one for example:
“Bloodbath strikes Australia’s sharemarket … $102 billion wipeout!”
Scary stuff.
However, you could rewrite that headline as:
“Shares fall to levels not seen since January.”
Not so scary.
However, if I was allowed to write the headline last week, here’s what I’d have written:
“Investors rejoice: shares go on sale!”
Most people are still working and are therefore still adding to their superannuation, so they should be cheering on the chance to buy at lower prices.
No one ever does, of course. Instead, they totally freak out!
And that’s why, many years ago, I made the decision to put my investing plan on autopilot. Each month I automatically buy the same index funds.
It’s what I call a ‘one and done’ decision, and it works in my favour: you see, the truth is that, on average, the share market has a drop of 10% or more almost every year. And it’s also true that shares have never failed to recover and hit new highs.
So, finally, why do I think it’s time for investors to play dead?
Well, Fidelity, one of the biggest asset managers on the planet, did a study on their top-performing client accounts. Guess what they found? Over 10 years, the best returns came from clients who had either forgotten about their investments, or were dead!
Tread Your Own Path!