Preparation Hour Is Here
Forward-looking statements are always a problem. Companies are not supposed to issue statements which could potentially mislead investors. Investment managers habitually exercise restraint in this area. They are very careful in their communication about future investment performance. Mostly, the commentary is merely sentiment related and generic.
Signals about the future from companies and fund managers may not meaningfully lead us forward. Waiting for signals that will never be clear only impedes our ability to make timely decisions. So, what should an investor do at a time when the future looks blurred due to political uncertainty, global headwinds, and persistent selling?
Solutions to external factors are always complex. The factors can suddenly change for the better leaving us completely unprepared. Or, they could worsen at a time when we least expect them to. Predicting is never easy, more so in circumstances like the present. The only option for every market participant is to achieve preparedness. An investor must prepare himself by expecting performance to dip and be ready to invest more under trying circumstances. Liquidity must be kept in a state of readiness. Investing more monies in difficult times can deliver superior investment performance when the tide turns. That we need to do this when others are not willing, is never going to be easy.
But that is how investment success is seeded. The coming weeks will need discerning investors to prepare themselves to do more when the herd is running scared.