IN THIS ISSUE:

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• Why I don’t watch TV investment programmes …
• On average investment 'experts' scream "BUY" 79 times a month...
• Repositioning: The #1 way to miss out on the market’s biggest moves

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From the pen of Karin Iten, managing editor, The South African Investor

Last month, I wrote you an email telling you that one of the best ways to increase your investment success was to diversify your investment approach by reading the works of many different types of investor. To spread your sphere of influence, so to speak.

And when I recently chatted to The South African Investor’s Global Investment Director, Alexander Green, he reiterated that, if you want to be a successful investor, you should avoid investment TV programmes like the plague.

My team of experts here at The South African Investor and I couldn’t agree more.

As Alex put it, the goals of these programmes “is not to make you money, but to sell advertising”. And while we believe most of the reporters are committed to doing their best on a story, the structure of these programmes is to keep you on the edge of your seat, depending on them for information on what to do next.

With inflation ticking ever higher… Unemployment remaining rife… And the stock market continuing on its rollercoaster ride… What do you need to know to keep your portfolio safe?

In today’s issue, South African Investor strategist, Marc Lichtenfeld, tells you how avoiding the ‘hype’ of mainstream media can help you do just that…

Why I don’t watch TV investment programmes
By Marc Lichtenfeld

Like Alex and Karin, I don’t watch investment TV.

Why?

Well, quite frankly, it reminds me of an old bit by comedian Tom Kenny (who went on to fame and fortune as the voice of SpongeBob SquarePants). Kenny talked about how sensationalised the commercials are for your local news. No matter what the story was, the voice-over would say, “Would you survive? Would your family survive?"”

And then the scenarios became even more ridiculous: “What if you were in an earthquake, trapped in a store that sold nothing but knives, propped up on flimsy shelves made of jagged glass? Would you survive? Would your family survive?”

That’s essentially what investment programmes try to do. They want you to live in fear and react to every little hiccup in the market so that you’re glued to their show to receive the advice from their guests and anchors.

If you make just one move to improve your portfolio’s performance this year… Turn off your TV!

In fact, you should tune out most of the financial media.

If you’re invested for the long haul, it really doesn’t matter if inflation is up two-tenths of a percent this year, or if the consumer price index (CPI) has increased by 4.6% over the past year, or even if the global Bull Bear Sentiment Indicator switches from bullish to bearish.

Your portfolio should be positioned to withstand good times and bad. You shouldn’t be jumping in and out of the market or sectors based on news, politics, the economy, or any other event. That kind of constant repositioning virtually guarantees that you’ll miss some of the biggest up moves in the market and be in the wrong place at the wrong time.

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On average investment 'experts' scream "BUY" 79 times a month...

But who gets it right? And who gets it wrong? Find out today...

79 share tips every month!

That’s 948 tips a year.

And that’s only from three respected financial magazines, four newsletter tip sheets, one brokerage, ten independent investment analysts and one TV channel. And they’re certainly not the only ones telling you where to put your money.

How do you decide who to listen to?

You can’t possibly put money into every one of those shares. Nor would you. So which of those hundreds of tips should be the one you add to your portfolio?

It’s simple. You can use what I call The Great Leveller.

What’s that? Find out here...
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Repositioning: The #1 way to miss out on the market’s biggest moves

In 2009, Invesco conducted a study showing the effects of missing the 10 best days of US market performance over the past 81 years. If you invested R1 in the S&P 500 in 1928 and held it, in 2009 it would have been worth R45.18.

However, if you missed the 10 best days during those 81 years (all of which came during the Great Depression and Great Recession), you’d have just R14.99, two-thirds less.

It would have been easy to miss those 10 days if you were spooked out of the market during those turbulent times. Of course, you likely would’ve missed the 10 worst, as well.

If you missed the 10 best and 10 worst, you would’ve ended up with R47.59, a tiny bit more than a traditional buy-and-hold strategy.

However, market timing is awfully difficult. If it was easy, everyone would do it. In my 20 years following the market, I’ve never come across anyone who could do it well consistently.

You shouldn’t try, either.

How to allocate assets the smart way…

For your long-term funds, be sure the assets are allocated in an intelligent way. I recommend using The South African Investor's Asset Allocation Model or the club's The Gone Fishin’ Portfolio, which consists of inexpensive ways to tap into the best funds the world has to offer.

Incidentally, I don’t mean to pick on just TV programmes. Much of online financial media is designed to generate page views, not make you money. There’s a proliferation of websites that throw every ticker symbol they can into a story so it shows up in as many places as possible – all designed so you click through to see what the news is – increasing page views.

I’ve lost count of how many times I clicked on a story involving one of the shares in my portfolio, only to read a ‘news’ item that had absolutely nothing to do with my share.

The lesson here: Don’t get bullied by the media into changing your well thought out plans. Once you have a plan, stick to it, until your needs change, not the market or economy.

Until next week… Here’s to your financial freedom,

Karin Iten and Marc Lichtenfeld