I’m afraid that there is evidence of a new and highly contagious illness; it’s taking over towns and cities and you could be next.
First it starts with a meeting, a thought, a suggestion and before you know it you are heading to oblivion. The name of this felonious disease? I call it ’short-termitis’.
Now, we can talk about how investors should assume a long-term timeframe until we are blue in the face. We can look at periods of up to 10 years as ideal for equities and go to serious lengths to ensure we communicate this. But once the dust has settled and the investments are embedded, there are some investors who start checking the value of their holdings every day (or more frequently) and panic when the performance slips. In this world of constant news flows and access to information, the issue of ’short-termitis’ is self-perpetuating. For some investors, 24 hours can seem a long time in the life of a stockmarket.
So do we task fund managers to go all out for short-term growth and ignore any long term potential whatsoever and would we really be comfortable with the results of that? (Gee blog continues below)
My view, for what it’s worth? Clients expect us to be ahead of the curve, to spot funds that are starting to go wrong for reasons that are likely to continue and to get out before it really hits home. But also we are there to educate, so if funds are underperforming and there is a valid reason for that, one which will easily be restored, then we have to reassure.
As for fund managers? Well I accept the need to focus on longer term potential, but life is not that simple and if you ignore the short term opportunities then you will lose friends quickly. The issue, as with most things in life, is getting a balance and reflecting that in your management style. As advisers we will do all we can to support you through more challenging times, but if you can’t appreciate the changing nature of the investor, then more fool you.
Philippa Gee is managing director of Philippa Gee Wealth Management.