The best solutions are inspired by the simplest questions.
Discipline is among the most essential prerequisites for successful investing. It can be tempting to make short-term decisions to get short-term gains but this can diminish long-term returns. GM Warburg Commercial uses a structured approach to our craft, ensuring we adhere to our core principles and consider the long-term implications of any action we take – or don’t take.
For the most part, investment should always be regarded as a long-term endeavor. Anything notably shorter than 5 years should be considered “saving” rather than “investing”. It goes without saying that no one can tell the future but what we do know is that, in investment, there will be periods of underperformance, the occasional financial crisis and significant global events that can and will have an impact on even the most accommodative and flexible investment strategy.
Avoid fear & greed
Our role here at GM Warburg Commercial is to steer our clients through both calm and stormy waters and help them focus on the bigger, more important picture and a long-term investment horizon is crucial to achieving that. One of the ways in which our strategy achieves this is by a resolute commitment to removing emotions – chiefly, those of fear and greed – from the investment decision-making process.
Greed contributes significantly to the formation of what are colloquially referred to as “bubbles”. This is when investors are buying into a market with little or no regard for the fundamentals of the asset or market being purchased and, in doing so, driving prices to unsustainable and unrealistic levels.
Fear can play a role in this bubble dynamic insofar as investors can be afraid of missing out on profits and so join the herd driving prices into “overbought” territory. However, fear is mainly manifested when prices fall sharply; this is when investors are afraid of getting back into assets in case their prices fall even further; this often culminates in prices becoming “oversold”.