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Ronald Stöferle, der sehr erfahrene Fund Manager und Aktienanalyst bei der liechtensteinischen Incrementum, schaut zurück in die Vergangenheit (Englisch).

Dear Ladies and Gentlemen

Thank you very much for your positive feedback on the article about Liechtenstein. Many of my readers seemed surprised that Liechtenstein only 100 years ago was an impoverished country. The example of Liechtenstein shows that many things are possible if only people stick together and are willing to work hard.

Interesting Study by J.P. Morgan
There has been a study by J. P. Morgan on the effects of «permanent investing», and I know this is nothing new to you, and I have been writing and talking about the effect of staying invested permanently in markets for years on many occasions, and yet, I know how it is, we all keep forgetting it.

Now, according to that study by J.P. Morgan, USD 10'000 invested in the S&P between the beginning of 2000 until the end of 2019 resulted in USD 32'421. In those 20 years, trading on the stock exchange happened on roughly 5'000 days. If an investor missed the ten best days of those 5'000 trading days, the result of the USD 10'000 initial investment would have amounted to USD 16'180, only.

Losses and Sorrow
The problem is that the returns of such a 20-year investment are not evenly distributed. Over those 20 years, investors experienced massive volatility, and unfortunately, very few investors can handle high volatility. The fear of losing everything triggers panic-sales on stock exchanges and leads to losses and sorrow. Mind you, I fully understand that, and while greed and fear dominate the exchanges, they are perceived very differently by investors. The same is valid with volatility. The sensitivity of investors is a very individual thing, and while one person does not get stressed if markets are moving up or down five or even ten percent, for another one, such may lead to sleepless nights.

In the long run, I believe investors should be invested and stay invested as suggested in J. P. Morgan's study. However, optimising investment returns and volatility is an individual thing, and if it makes you sleep better to hedge your portfolio, take profits, and/or reduce your exposure, I think you should definitely do it.

Quelle: Incrementum AG