During my scan of the financial press on Thursday I came across a piece written by Ross Gittins, a well respected financial journalist for the Sydney Morning Herald and The Age. The article that sets out some simple but absolute essential pearls of wisdom.
The passage of the article that spoke most clearly was this .
"nobody, but nobody, knows what the future holds for the economy and markets. That's true no matter how expert they are or how confident they sound. It's true of everyone from Warren Buffett to the governor of the Reserve Bank to the lowliest bar room pundit. To put it politely, the forecasting records of those people - yours truly included - leave them with much to be modest about."
In fact the whole article is well worth a read - No crystal ball for investors.
The remainder of the article points out some truths of investing:
- the future is unknowable,
- the nature of markets to move through boom and bust cycles,
- the trap of buying high and selling low,
- the impossibility of picking turning points so don't bother,
- downturns will be followed by upturns and the longer-term trend is steadily upward,
- avoid transaction costs - commissions, entry and exit fees
- focus on the long-term
- be a holder not a trader
I highly recommend that you read the article. It's exactly what we are telling our clients both in upward and downward moving markets.