When there’s been a crime, like a burglary, it’s natural to assume the thieves will strike the same place again – there’s no point adding an extra deadbolt when you leave your windows open at night though right?
The GFC changed the world permanently, and we’re still suffering from this shock to the global financial system – it’s natural to think this time around that if there’s another ‘correction’, it will come from the same place. Our confirmation bias is actively at work here looking for the same villains acting in the same way to bring about the same disaster again. ‘The first principle is that you must not fool yourself [by thinking this way], and [we] are the easiest person to fool’ – Richard Feynman
Consider the US Fed, and how they’ve balls up every economic recovery since WW2. After raising rates this year they’re stuck between a rock and a hard place: Do they drop or do they raise – either way, there will be fallout. Kill the share markets or kill the consumer/worker?
The [potential] fall of the US economic superpower could be a place to look for the next catalyst, but it’s hard to say if that ‘can’ will be kicked further down the road or whether the pride (of their current leader) will truly precede a massive fallout sooner.
What does all this mean for the NZ Everyday Investor? Is changing your investment strategy a good idea or should you stay the course? Stay invested in funds that simply track the market, when the markets are heading for stormy territory? Keep managing your funds alone or employ an expert to manage it for you?
Mike Taylor from PIE funds and JUNO Kiwisaver join us in the studio to discuss these questions and more – he’s weathered some storms himself, and instead of shrinking back, he took ground. Mike has been passionate about investing since he bought his first shares as an 18 year old. He realised his dream of running his own fund in 2007 and despite a number of tough years, Pie Funds has grown into a sizeable operation with an impressive track record.
Mentioned in the show:
NZ Everyday Investor Podcast:
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