I attended a two day investment academy this week during which the focus was placed firmly on what the next “King” of investments would be.
Topics included a range of investment areas: gold bullion, Australian equities, international equities, developed and emerging markets, bonds, currency and many others. Each speaker presented compelling arguments for their point of view, and these ranged from one extreme to the other.
Australian equities are undervalued, developed markets are flush with cash and opportunity, emerging markets have to catch up with their share of GDP, etc. etc. Round and round we went with argument and counter-argument but there was very little change to people’s original positions.
A detailed discussion about how to determine the right time to invest created debate around what to use as indicators. One school of thought involved building a 10 year forecast in order to determine fair value now. The other involved using momentum as the indicator (i.e. where the money is going now).
After two days and much discussion, there were still no clear answers I couldn’t help thinking that all the discussion about the detail was being trampled by each person’s belief system around investing. It seemed to me that once the belief was in place, it was simply a case of continuing to justify it with ‘technical’ arguments. I wondered how many of those in the room were even aware of their investment beliefs.
The only thing that was agreed upon by everyone was the need for diversification. That alone confirms at least one money belief shared by all: It is impossible to really predict the markets. So the ‘king’ of diversification is in fact not dead – it is still very much alive.
To check whether your investment portfolio is DIVERSIFIED or DIWORSIFIED contact Melissa Oliver at SentinelWealth to set up a portfolio review.
Note 1: “Diversified” is a portfolio with multiple assets that all behave in a similar way. Note 2: “Diworsified” is a portfolio of assets with relatively low correlations that creates stability and reduces volatility.
