The death of shares
Eighteen months ago, investors were euphorically excited about investing in shares. Risk or the danger that shares could ease didn’t play any role in decision-making. The situation at the time was almost reminiscent of vultures at a carcass.
The rest is, as they say, history. Shares are dead, or at any rate, they are like a disgraced family member - the family prefers not to talk about the situation.
The investment environment has indeed changed fundamentally. Large companies with previously proven yield histories of more than a hundred years suddenly no longer exist. The market capitalization of others that survived has shrunk alarmingly.
Investors are thus afraid with good reason. Few people have lived through such an economic crisis in their lifetime. Lifebuoys thrown out by governments to stabilise the economies have had little influence so far.
Our own economy is only now really starting to feel the cold winds of change while experts warn that the worst is yet to come.
Shares are thus dead with good reason … or are they really? Although no experienced vulture will leave a fresh carcass in peace, the danger exists that investors may be allowing the biggest investment opportunity of their lives to slip through their fingers.
Although nobody can correctly predict the turning point of the bear market, several fund managers agree that there are many companies out there who will successfully survive the storms. The market has the tendency to turn while economic news is still very dark.
Could it be that investors will be caught on the wrong foot again?
If you are young or perhaps began saving recently, you can lay a solid foundation for the future by investing in a focussed shares investment strategy. In future, do not become panicky when such negative economic times re-appear. Remember that markets always move in cycles and by investing more when the markets are easing, you can really improve your total yield over time.
If you are already retired and withdraw an income from your portfolio, you must diversify to effectively counteract the negative cycles. Make sure that you have a tested investment strategy and stick to it in the long term.
If, in the longer term, the top business entrepreneurs can’t do better with their capital than a safe bank investment, then shares are indeed dead.
Shares are dead - long live shares!
Tags: Add new tag, Investments, Shares