be growing their personal wealth . When markets become volatile or start looking bearish , the best course of action for any investor is not to become so focused on the fear of loss that they lose sight of their long-term reasons for investing . Unless your goal or timeline has changed , you need to continue steering towards your destination , rather than completely adjusting your sails just to avoid having your investment boat rocked by a temporary change in wind direction .
2 . DON ’ T BE TEMPTED TO RUN
It ’ s human nature to want to avoid loss . That ’ s why so many inexperienced investors start to sell off their stocks at the first sign of a protracted market downturn . Unfortunately , rather than avoiding losses , this course of action only serves to lock them in . And , as any investor will tell you , trying to time the market so that you can buy back in at discounted values and benefit from the recovery is very often just as much a fool ’ s game as selling when markets are dropping .
3 . IF YOU MUST DO SOMETHING , REBALANCE
While a long-term approach to investing is very important , the dynamic and ever-changing nature of markets , coupled with the changing goals and objectives of investors , makes regular rebalancing of any investment portfolio essential . This can be as simple as checking that the changes in the value of those shares making up your portfolio haven ’ t unacceptably skewed your overall mix of assets . When markets turn sharply downwards , and continue on that trajectory for some time , strategically rebalancing your portfolio , possibly to incorporate even broader diversification , can be a very useful exercise , provided it isn ’ t used as an excuse to run ( see point 2 above ).
SA Real Estate Investor Magazine SEPTEMBER 2022 69