In a recent podcast on the Allan Gray Podcast with Dan Brocklemank, head of Orbis UK, he reflected on how humans are NOT designed to be good investors. Our natural instincts very often pull us in the exact opposite direction to what we need to be doing in order to be good at investing.
Our natural habits and instincts protect us in the present; they’re not good at protecting us for the future and seeing the bigger picture.
It’s partially why Warren Buffet once said that the most important quality for an investor is temperament, not intellect. It’s not always what we know in the here and now, but how we behave when we see others in a state of panic.
Throughout history, there have been bubbles in the markets that have incited irrational investor behavior; everyone can see them happening, and yet they all buy, driving up the prices, even when the market value is radically out of sync.
It almost feels trite to repeat the saying that it’s all about time in the markets, not timing the markets, but it’s an old investment truth that still rings soundly, even in the current global environment.
Long-term investors have always had to make sense of a barrage of information, from market movements and geopolitical news to economic developments and personal finance trends.
With the digital age giving rise to a new culture of near-limitless access to information, this is now even more challenging.
If you’re looking to build and sustain a long-term wealth strategy, it’s helpful to have a long-term relationship with a financial planner who is willing to work closely with you to help you create and stick to your financial goals.
This is because, despite all our investing history and available technology, forecasters are still so bad at predicting what will happen tomorrow and why we still believe that the best way to build wealth is by adopting a long-term approach. Working with someone you know and trust, who can talk you out of a hole or off a ledge, is going to become paramount to growing a strong, robust investment portfolio.