2015 – Expect Less, Invest More.

2014 was a blockbuster year for equity investing. It played out like a film script. 2014 was born out of pessimism. Markets outgrew skepticism as elections drew near. A clear mandate triggered market euphoria. Stock aversion seen in 2013 turned into stock affliction in 2014. Both mind states are terrible, to say the least. Equity investing needs to manage emotions better in 2015. We may not see extreme emotions in 2015. There could be the odd bout of fear thrown at us from across the globe. But, we must learn to live with it. We need to turn fear into opportunity by being well prepared. Expect the worst. The important thing to remember when we migrate from a bumper year to a modest one – Lower expectations. Those who were adequately invested from 2013 through 2014 have already seen returns that should have been made in 2015. Those who missed the equity bus in 2014 should slowly board it through 2015. Big returns will have to wait. Meanwhile, keep investing in anticipation of better times. Equity will outperform other asset classes over a three year timeframe. Quick cures need to be discovered for those suffering from long term stock aversion. Or else, the pain will double.

“In economics things take longer to happen than you think they will, and then they happen faster than you thought they could.” – Rudiger Dornbusch