December should be a time of peace, cheer and goodwill to all men. But, if you\u2019re a South African investor, it\u2019s the month that likely brings up residual trauma of some decidedly un-jolly happenings from recent years\u2019 Decembers. Cabinet reshuffle. Nenegate. Steinhoff. What is it about the twelfth month of the year that turns the festive season into the silly season?<\/p>\n
If you\u2019re understandably nervous this time of year as an investor, fear not. While no portfolio is fireproof to completely uncontrollable events like black swans and major unforeseen global macroeconomic events (like the first 2016 Brexit referendum), there is a lot you can do to limit your exposure to market-affecting shenanigans on the home front.<\/p>\n
Here are a few ways to ensure that your portfolio doesn\u2019t go \u2018ki Dezember\u2019 crazy this month, if the markets do:<\/p>\n
Manage your emotions<\/strong><\/p>\n It\u2019s amazing how simple logic is so easily questioned when the buying of Christmas gifts, expensive holidays, Black Friday remorse and seeing far more family and friends that we usually do all play into the mix. Against this highly emotionally charged backdrop people tend to behave a little irrationally. And, when it comes to investing, emotional = dangerous.<\/p>\n The age-old maxim of \u2018buy low, sell high\u2019 works for a reason. And, most of the year, you may well stick to it. In December, be aware that you may try to knee-jerk sell. Don\u2019t do it. Unless a major macroeconomic event like the actual apocalypse is happening, let\u2019s have a quick WhatsApp catch up or a short phone call to double-check the best options.<\/p>\n Cash is king \u2013 in context<\/strong><\/p>\n You don\u2019t get much more liquidity than cash. And in times of trouble or uncertainty, people opt for several versions of the old \u2018cash under the mattress\u2019 trick, like holding cash in a standard bank account or stocking up on Krugerrands.<\/p>\n Cash is an option, but it works best inside of a diversification strategy. Nothing short of a very well-proven crystal ball will help you move exactly the right thing at the right time to the right place. It\u2019s about having all your assets in different places, different classes and with different levels of liquidity that will see you through.<\/p>\n Don\u2019t make any sudden moves<\/strong><\/p>\n When it comes to investing, always remember: any change costs something. A change when everyone else is pulling the same change (like investing offshore), is also expensive. Try not to suddenly pull huge lump sums out of equities and into a different class without it being in line with your long-term strategy.<\/p>\n A move like this, which may seem simple enough, could cost you five times: the price of the fee to pull money out of equities, the setup price of moving into bonds, the loss of momentum on your equities, the loss of any compounding you may have been about to tap into or eventually attain on your equities and the price of starting from zero in the new asset class.<\/p>\n Switching things up in your portfolio is sometimes necessary, but it must be done inside of a comprehensive strategy, not a panicked whim. When nearing the end of an investment term, it could be a good time to change your weighting in various classes and the diversification of your portfolio. Feeling scared watching the news is not.<\/p>\n Be commitment wise<\/strong><\/p>\n Don\u2019t get involved in something you don\u2019t know well. December is often the time of year-end bonuses. Feeling jolly, you may think: \u2018hey, why not try out Bitcoin?\u2019<\/p>\n Unless you\u2019ve been studying the market history, inner workings and headlines surrounding Bitcoin for more than a year, maybe give it a little more thought.<\/p>\n Many tried this back in 2017 when Bitcoin was trending and either lost all that irreplaceable, untraceable investment in a hacker\u2019s spree or waited until December 2018 to find out it was worth 80 percent less.<\/p>\n Ultimately, investing always works best when you have a trusted, second opinion to every move you want to make. Either knuckle down and focus on the people around you and let your money work for you, or let\u2019s get in touch and have a comforting cup of coffee to bolster your portfolio.<\/p>\n","protected":false},"excerpt":{"rendered":" December should be a time of peace, cheer and goodwill to all men. But, if you\u2019re a South African investor, it\u2019s the month that likely brings up residual trauma of some decidedly un-jolly happenings from recent years\u2019 Decembers. Cabinet reshuffle. Nenegate. Steinhoff. What is it about the twelfth month of the year that turns the […]<\/p>\n","protected":false},"author":1,"featured_media":3382,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,28],"tags":[],"class_list":{"0":"post-3381","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","6":"hentry","7":"category-blog","8":"category-market","10":"post-with-thumbnail","11":"post-with-thumbnail-large"},"yoast_head":"\n