A good one to start off the year. As is customary now, I have the contribution ready to roll at the beginning of the month and sent it over. Didn’t delay and added 1x contribution to Australian high yield. It promptly went on a tear and I think was up 7-8% for the month.
If we’re getting a turnaround this year, hopefully all those contributions made during the turmoil, at what I hope to be discount, will pay off. In saying that, I wasn’t punished as badly as probably a lot of other people who “just index bro” with two funds. Thanks to global value and Australian high yield, plus adding Australian REITs after they were slaughtered about 30% ensured I had half my portfolio in the green. It was the “just index bro” funds that kept me in the red.
On that, maybe it’s good that people have turned into automatons, select two funds and do the most basic thing over and over. However some of the language used by these people is idiotic. I saw on a forum recently someone asking for advice on investing. The responses always come in the same way: “VAS,VGS or VDHG, set and forget bro, it’s all you need”. Unfortunately, idiots are adding in things like these ETFs are safe, no risk, with proven returns and other similar idiot statements.
Peddling such ignorance to people who have no idea what they’re doing is dangerous. It puts people in the mindset that an ETF is a savings account, and is on a forever upward moving escalator. What happens when the market loses 15% in six weeks? The people who have been told lies about there being no risk will panic.
They’re out of their minds because they have no reference that this could happen. After all, investing was meant to be safe. You’ve got 50% in one fund with 300 stocks in it, the other 50% in another fund with about 1500 in it, but also exposed to currency fluctuations. If that’s you’re chosen portfolio, no worries, but don’t tell noobs that it’s safe, no risk, or proven.
Ask them about the lost decade and I doubt there will be a response. Did you know that second 50% of your portfolio (the underlying index VGS is based on) lost 30.82% between 2000-2009, an annulised return of -3.62%.
It’s where the stockmarket is rigged nonsense comes from. If you’re unaware of the possible downsides then emotion will dictate your response when you feel the rug has been pulled out. That will likely be selling to stop the pain and ensure you don’t lose more. Then you’ll feel humiliated when you sell, only to see the market rebound. Easy to then take the quickest route from humiliation to conspiracy and conclude it was a plan to rob you of your money.
Rant over. Until next month!
Disclaimer: The discipline project is a personal endeavour and should not be constituted as a financial strategy that anyone should follow. It is more a study in repetition and shutting out the noise in pursuing a financial goal, than any focus on portfolio construction. Anyone looking to build a portfolio should seek financial advice to find out which strategy is right for them, if you are a high net worth investor looking financial advice then you should consider a financial adviser with high net worth experience, they can help you identify your goals and put in place a reliable strategy to pursue them
