In our 2020 Outlook Series, Simon Mawhinney of Allan Gray called it correctly with this idiom: “It’s the bus you don’t see that hits you”. While this is an apt description for the subsequent COVID-19 crisis, Simon says it’s important to remember that bear markets are part and parcel of the investing cycle.
“A lot of dislocations that happen from time-to-time are not necessarily permanent. Of course there are some structural changes that take place, but a lot of things are cyclical and don’t last forever, and that may well be true of this virus.”
For those finding it difficult to stomach the volatility, Simon explains the importance of looking at the bigger picture and avoiding making one “financially ruinous” mistake right now.
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Contrarian investing is not for everyone, however there can be great rewards for the patient investor who embraces Allan Gray’s approach. To stay up to date with our latest thinking, hit the follow button below or contact us for further information.
Disclaimer
Past performance is not a reliable indicator of future results. The value of investments in the Allan Gray Australia Funds may fluctuate and when making an investment in the Funds, an investor’s capital is at risk. It is therefore important that you understand the risks involved before investing. This publication represents Allan Gray's view at the point of filming on 11 March 2020 which may have subsequently changed as facts or circumstances change. This publication is not personal financial product, tax, legal, or investment advice, and does not take into account the specific investment objectives, financial situation or individual needs of any particular person. This publication does not prohibit the Allan Gray Australia Funds from dealing in the securities mentioned before or after publication.
michael magill
Even your voice is calm mate.
Tyson Lehn
I missed the point to sell after following the strategy of a 'no rebalance' buy and hold DIY investment platform membership where they nominate when to sell individual selected stocks There was no call to sell. Now I sit here massively currently down 35% from the high and 13% loss off my initial investment base. Wiping all profits out since GFC recovery. It is obvious that I would have benefited immensely from selling out before the Corona Virus crash. And I will regret that for the rest of my life. But mixed messages suggested that the 'correction' would likely be brief. I have hovered over capitulating several times when further routs have occurred as it is a continual bloodbath with fear at extreme levels (including myself). Now facing heavy losses if I sell, I have been caught in a paralysing situation of mixed messages - prospects of rampant insolvenices, suggested decade or decades of time to recover, heavily downgraded shares with reduced dividends, mention that this will be 1.5 times worse than the GFC, but advisors saying to hold firm and maintain your resolve. My fear is that listening to others has led me twice to heavy losses (GFC included). I still find it extremely difficult. Share trading psychology and coping strategies is a component crucial to success. It seems most like me fail in the market.
Darren Noway
Contrarian investment is not for everyone - very few in fact.
James Bailey
Can you please interview him again when the ASX200 is at 3500