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  • Robert de Lepervanche

Year end musings

Whether you get caught up in the festivities of the season, or choose to take a more low key approach, the end of the year is usually a good time to catch up with family & friends and we trust your holiday season (if you get one) is enjoyable.

Of course there are also those who find this time of the year quite difficult if they have lost family or find themselves on their own, and our thoughts are also with you at this time.

While I won’t bore you with too much financial jargon, it is an interesting time to reflect on the year that has been and also consider what the year ahead my look like. For those of us who can remember back to the start of the year, it is worthwhile noting that our sharemarket plummeted in early January, through until about mid-February, where it was off about 10%. At the time we said we had been here before and while unpleasant, it was basically business as usual.

If at that time we had been able to predict Brexit, Trump and the recent result of the Italian Referendum, we probably wouldn’t have been so confident. All the so called “experts” predicted the markets would react negatively given the results we now know to be true, but you know the funny thing is; in all cases the markets have rallied post these results.

I’m not sure what this tells us and I don’t pretend to be an expert in picking the short term direction of the market, but I guess the one thing I can confidently say is we shouldn’t get caught up in the “short term noise” around us unless you are a trader………….and most of us aren’t.

The investment philosophy we take is designed to achieve your long term goals (5 years plus), while trying to reduce your market risk or volatility. As such we try not to get too caught up in the short term hype, whether good or bad.

Just in case anyone is interested in what the return of the ASX 200 has been over the last five years, it’s about 30%. That doesn’t include dividends which add about another 3% per annum, making a total of about 9%pa on average. Not bad in a period when interest rates have been at record lows.

I said I wouldn’t bore you with too much jargon and now I find myself quoting figures & returns, so I’m sorry about that. However as with most of my articles (well probably all actually!), I start with a vague idea and then just ramble on from there, so my point re the above is that the markets will fluctuate, at times you’ll think we are geniuses, at times you’ll think we have no idea, but the markets will largely run their course regardless.

Investing isn’t about picking next year’s winners (that’s punting); it’s about setting a strategy to help achieve your goals over the long term and that’s what we do. So forget about the markets over the festive season and concentrate on the things that bring you satisfaction, happiness, meaning, direction, or whatever it is that is your “reason for the season”.

Finally, we truly appreciate the privileged position we hold in your lives and the fact that you share your journey with us and allow us to play a role in helping you achieve your goals, thank you.


P.s. in accordance with the above I have some thoughts, but I don’t really know what will happen in the markets next year, and I am comfortable with that. I will leave the predictions to the experts…………while it doesn’t help much, it usually makes interesting reading!

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