Eye of The Storm
In 1992 I was working for a Japanese Bank called Mitsubishi as a Bond Trader.
At that time the UK was in a crisis, and an investor named George Soros was known to have 'broken the Bank of England' through negative bets on the British Pound. I remember the feeling of panic in the room, the feeling that “this was it”.
In 2000 I was working for Reuters in London. We had all dropped our suits for more smart casual clothing to reflect the new ‘.com’ era. There was a brutal crash of the stock market. We were all glued to our screens with all the worlds news feeds at our fingertips. I thought that ‘this is it’.
In 2008 In New Zealand, I had been a Financial Adviser here for a couple of years. A very complex set of financial events caused a collapse that we now call the G.F.C. Banks were going under overseas. Financial Markets reacted badly, and Balanced funds dropped 13%. We wondered “is this it”?
In all those events and more than you may recall, there was an eye of the storm, fear was palpable, the future was bleak.
These events caused systemic shifts in our society and our financial markets, yet not all was lost. Tomorrows came and the future looked a wee bit better. Financial Markets bounced back, some occasions took longer than others, yet bounce back they did. Positivity took over.
In all these events I have been temped to run for the hills. Not at the start of the crisis, but in the eye of the storm, when all seems dark, when news cannot get much worse. I never have.
Financial markets are Dumb, they feed on greed and fear. We all want to run away when the fear is with us. We are tempted to sell even when the markets have already dropped, and we will lock in the losses. We kid ourselves that we will jump in ‘at the bottom’ and buy back lower. A wise man once told me that “people who try to pick bottoms get smelly fingers”.
At the bottom, when all is chaos, the last thing we will do is buy. We will wait for a couple of year and buy back in. Missing the bounce back, missing the greed, hoping to win back crystallized losses.
So, I hold.
James is an Authorised Financial Adviser.
This does not constitute personal financial advice.