Life Boat Drills

If you have ever been on a cruise, you will be aware that the crew will carry out lifeboat drills either in harbour or shortly after leaving.

They are not expecting anything bad to happen but are letting us know what to do, just in case.

Well, we do the same for our investment clients.

It is natural to panic when your investments rapidly drop in value, as they did in March 2020. But the key is to maintain discipline and resist the urge to sell. It is a credit to you all that only one of you sold at that time. By the way, that client came back a few months later.

Downturns happen on average once every 5 years and this is a normal part of the investment cycle. It is where the wise investor really makes their money as they buy shares in the great companies of the World at fire-sale prices.

It is also where the flapper sells at a huge loss and vows never to "play the Stockmarket" again. But who bought their shares? Why, the wise investor of course.

So the next time that things are looking bad, switch off the NEWS (Negative Events World Service), stop looking incessantly at your portfolio, buy more units if you can and tell yourself "this is meant to happen and I am fine with it".

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