It never ceases to amaze me that some people think investing is so easy, that they could do it blindfolded and still make money. Now to a certain extent that is true in a bull market when prices and valuations basically only rise, and let’s be honest, at times like this you could invest in almost anything and it would make money. But, this last week saw a big drop in the FTSE and other markets over fears that the control over COVID is not getting a great deal better, so what do investors do then?
The simple answer is not to panic. Yes, everything will go down in value and you will be hit with losses on some funds, but that is to be expected and the main thing that you need do is anything but a knee jerk reaction – as that will give you the wrong outcome. Of course, some advisers will do nothing anyway as they may have clients in passive type funds, but that shouldn’t stop them reviewing things.
What we do at MAP is fallback to our research BEFORE we do anything, because it is always far better to have a logical approach to things as opposed to a scatter gun approach. At MAP we do two main pieces of research on what funds that we use and this is 1. Long-term and 2. Short term. The long-term approach wouldn’t change things in this aspect as what we look at is what funds have good consistent performance over 1, 3 and 5 years. Where the main difference is though is in the short-term analysis. Every week we analyse all the funds that have a good long term performance to find out the best ones that are still doing this SHORT TERM and in this respect we look at performances over the previous 3 months, and we highlight the top 10 performers in low risk, middle risk and high risk.
So what we would do at MAP is wait until any fall in values has settled down, and then we would look to see what funds have maintained their performance in the short term – and this then identifies the funds that we would use – and it is based on FACTS. This means that you are not doing a knee jerk reaction and instead only making changes based on logical facts and statistics. Far better that way.
We don’t do a lot of research to find out the best funds for our clients only to jump out of them at the first hint of trouble.
MAP does all the background work – so that you don’t need to.
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