Searching for sages: Editor's note
Even a broken clock is right twice a day.
I had the pleasure of welcoming readers to the annual Morningstar Investment Conference on Thursday. Putting together an engaging all-day agenda is never easy, particularly when you're forced to switch to an all-digital event at the last minute, but few things make me happier than when I see attendees engaging with the topics and each other. We’re a diverse bunch: old and young, left and right, old hands at investing or dipping our toe into markets for the first time. But we’re united by the single goal of achieving financial independence. Learning from each other's experiences is what gives us the confidence to manage our money with confidence in uncertain times.
Maybe we're just that good at predicting markets, or we have a crystal ball, but our decision to delay the conference from October 2021 to February 2022 was serendipitous in one sense. It landed the event right in the middle of market turmoil, right when investors are looking for insights and analysts are eager to give them. As the person responsible for designing the agenda, I wanted a diversity of opinions but watching with my investor hat on, I realised just how confusing it can all be. They can't all be right, can they?
Unfortunately, right now there are reasons to doubt everyone. The people crying bubble may be correct this time, but have they been wrong for long enough to stop taking them seriously? Inflation was transitory, then it wasn't, and now it's the only thing people are talking about. A trusted figure like Hamish Douglass has investors rattled with his inability to read markets since the covid-stockmarket bounce, while the sudden drop in Chinese equities has many questioning whether investment managers are adequately assessing risk when talking up growth stories.
I wish I could present you with a magic formula or the person who makes the right call at the right moment every time but it doesn't work like that. Investing is about taking on (calculated) risk, learning from our mistakes and having a bit of luck. And as my colleague Lewis Jackson demonstrated last week, timing the market is notoriously difficult and can lead you to miss out on the best months if you fail to pick when to get back in.
If there's one thing I can say it's that those on stage focus on the investment, whereas you can focus on yourself. Asset allocation can seem hopelessly black-boxy, but as Morningstar's director of personal finance Christine Benz notes, your financial capital should align with your human capital. She says when you're young and long on human capital, it makes sense to invest aggressively (at least as aggressively as you can stand) because it's unlikely you'll need to rely on your investment portfolio for living expenses for many years to come. You can afford to withstand more volatility, and that means more stocks. As you get older and get closer to drawing upon your portfolio, you'll still want to make sure your portfolio has growth potential, but you'll also want to steer into safe investments because you don't want to be in the position of withdrawing from investments as they're falling. As viewer Mavis noted yesterday, "I'm 90, nearly 91, what is long term investing?"
Over the next year, there'll be no shortage of experts lining up to give their opinions. Listen to those providing independent analysis, while maintaining a degree of scepticism, but above all focus on yourself and what makes sense for your investing journey. As Graham Hand writes in Firstlinks this week, "the cost of participation in the long-term gains from equities comes with the risk of greater price volatility in the short term. Only you know if you have the temperament to stick it out when the market sells off."
We hope that we can welcome everyone again in person later this year, Covid-willing.
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Your Money Weeky's Peter Warnes delivered his views on the market to conference attendees on Thursday, neatly summarised here.
It was hard to miss the news about Facebook parent Meta this week, its shares plummeting 26% in a single day and lopping more than US$200 billion off the market value. Catch up on this and more with our weekly news roundup.
As one event ends, the next begins. The 2022 half-yearly reporting season is upon us. Over the next month, Australia's largest listed companies will reveal the impact of a covid-disrupted second half of 2021 on earnings. Keep up to date with our reporting season calendar, and for Premium subscribers, Morningstar analyst's take on the results.
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