Investing should be boring: fundie

Yes, that's really what one fund manager said. Take a look.

| More on:
A close up picture taken from the side of a man with his head face down on his laptop computer keyboard as though he is in great despair over a mistake or error he has made or bad news he has received.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Investing should always be a long-term endeavour, argues one fund manager
  • This may be boring and/or time consuming but it's an integral ingredient to success, he says
  • Meanwhile, the benchmark index continues its slide in afternoon trade

Losses continue on the ASX today with the benchmark S&P/ASX 200 Index (ASX: XJO) sliding a further 69.5 basis points — or 1.04% — at the time of writing.

The dip brings the index's losses to more than 10.5% this year to date for Australia's 200 largest companies by market capitalisation.

Yet despite the allure of certain growth stories in recent years (meme stocks included), according to one fund manager, investors should be focused on the long-term — as boring as that may sound.

The beauty of 'unknown-unknowns'

The harsh reality is that no one can see or predict what big risks there are on the horizon.

It's a mathematical impossibility to forecast the number of variables that could affect outcomes on the markets, let alone ASX 200 shares.

This is especially the case for black swan events like the COVID-19 pandemic, according to Spatium Capital fund manager Nicholas Quinn. He wrote on Livewire:

At its inception, the unknown-unknown nature of the pandemic was that unpredictable that it was unlikely to be solved using logic or predictive algorithms. If we consider a less destructive situation, logic or predicative algorithms have a great deal of difficulty trying to [make predictions].

However, there is one certainty in the markets, Quinn says. These "unknown-unknowns" mean there will "will always be perpetual worry in the financial markets".

The one guarantee we are almost prepared to give is that when new unknown-unknowns enter the macro news cycle, you can almost always expect an overreaction.

With that level of "certainty", he says to focus on certain tenements to calm these worries — and potentially smooth ASX 200 investment returns for the long-term.

"Investing generally should be a boring, time-consuming and not an exciting endeavour," he says, "which generally should be engaged in over a lengthy time horizon."

The fund manager also advocates diversification and avoiding "blindly following herds".

"Last but not least," Quinn advises, "don't check your portfolio each day or each hour — short-term variance is all part of the long-term reward."

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Investing Strategies

Man putting in a coin in a coin jar with piles of coins next to it.
Dividend Investing

Where I'd invest $5,000 into ASX dividend shares right now

These stocks are strong contenders for passive income.

Read more »

Woman relaxing on her phone on her couch, symbolising passive income.
Dividend Investing

Why I think these 2 ASX dividend shares are ideal for income investors

These businesses offer a lot for income seekers.

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
Dividend Investing

Is the Suncorp share price a buy for passive income?

Investors could gain a lot of income from this stock.

Read more »

a man in a business suit and carrying a laptop stands smiling with hand in pocket outside a large office building in a city environment.
Growth Shares

Buy these 2 impressive ASX 200 shares in July: experts

Experts are bullish about these two businesses.

Read more »

View of a business man's hand passing a $100 note to another with a bank in the background.
Dividend Investing

3 ASX dividend shares to buy with $10,000

Let’s see which shares brokers think are in the buy zone right now.

Read more »

A bearded man holds both arms up diagonally and points with his index fingers to the sky with a thrilled look on his face over these rising Tassal share price
Growth Shares

3 ASX 200 shares set to dominate the next decade

Let's see why these shares could be great long term picks for Aussie investors.

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Index investing

ASX 200 or ASX 300? Here's the index fund that comes out on top

Do those extra 100 stocks really make a difference?

Read more »

Dog with a shoe in its mouth.
Cheap Shares

I think these 2 cheap ASX shares are buys for value investors

These businesses could be too cheap to ignore.

Read more »