By Shane Oliver, Head of Investment Strategy & Chief Economist from Oliver’s Insights, AMP Capital, Edition 28 2015
Key points
- Over long periods of time shares and other growth assets deliver for investors via the power of compound interest.
- However, cyclical swings can frequently throw investors off and reacting to periods of poor returns by moving to cash only locks in losses and poor long term returns.
- So the key for investors is to either adopt a long term strategy and stick to it or, where this is not possible or the investor wants to take advantage of the opportunities that arise from cyclical swings, adopt a rigorous approach to dynamically varying the asset mix in anticipation of cyclical swings.