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The equity markets generally had a good few months and with financial markets having gained strongly over 2003, most global investors are feeling far more relaxed and confident. Financial markets gain ground on confidence and this appears to be the prevailing mood.
As an investment advisor, I am constantly on the lookout for investment opportunities, and this is especially as regards the most efficient allocation of client funds. In formulating an investment plan for clients, it's a matter of trying to identify, and then with some level of accuracy, measure:
Peter Bernstein a well respected US economic and financial consultant, wrote: "In their calmer moments, investors recognize their inability to know what the future holds. In moments of extreme panic or enthusiasm, however, they become remarkably bold in their predictions; they act as though uncertainty has vanished and the outcome is beyond doubt. Reality is abruptly transformed into that hypothetical future where the outcome is known. These are rare occasions, but they are also unforgettable: major tops and bottoms in markets are defined by this switch from doubt to certainty."
In my opinion investing has a lot more to do with assessing or at least trying to assess risks as opposed to upside. It very easy to pay up the price required and wait for the expected returns to materialise. These may or may not be achieved, but it's the downside risk of capital loss that needs to be properly managed and is often of far more importance.
Not a bad year for local equities. After a shaky first 3 months or so, and despite the firming of the rand throughout 2003, share price rises gained momentum towards the end of the year. As was the case in 2001, all of the years gain was made up in the 4th quarter, which saw equities return 17,1% versus the All bond index of just 2,8%.
Even so with the market gains, bonds produced better overall performance on a pre tax basis, with the All bond index giving a return of 18,1% against equities producing a total annual return for 2003 of 16,1%.
If you are looking for customised investment counsel, please don't hesitate to contact me.
Posted: 2004/01/27 17:24 View Archive | |