Investment news for you
Some of our ladies prepared a delicious Spring Day breakfast for Jurgens Finance, which was thoroughly enjoyed by all!
Short Term News Update from Greg Brits
A message from Mark Jurgens
Having discussed behavioural ﬁnance in previous newsletters, I want to continue with an additional bias, being the Action Bias. The Action Bias describes our tendency to favour action over inaction, often to our beneﬁt. However, there are times we feel compelled to act, even if there is no evidence that it will lead to a better outcome than doing nothing.
A recent appropriate example of this would be a study by Momentum. 2021 saw increased engagement between investors and their portfolios, driven by panic – causing many investors to lose money by switching their investments midway through the downfall. It was found that retirement investors performed more than double the volume of switches to their portfolios in 2021, amounting to over 50 000 switches. Putting it into perspective, these 50 000 plus switches in the retirement investment landscape resulted in nearly half a billion rands in value destroyed in 2020 and 2021 as retirees battled to overcome the market turbulence trap that may have lasting effects to their standard of living.
Momentum, being a medium sized asset management company holding only a portion of retirement investments, have only reported their ﬁgures. This means that taking into account all investment management companies, this loss would amount to billions of rands.
Factors such as panic, overconﬁdence, and a desire for control can lead us to make poor decisions when it comes to our investments. It can result in us over-trading or selling at low levels. These decisions result from the action bias, as we feel compelled to do something, instead of patiently working towards a future goal. In situations where the correct decision is unclear, our automatic response tends to be based in action; ignoring the potential beneﬁts of inaction. As we have consistently advised you, our clients, more damage is done by making changes to portfolios and attempting to ‘time the market’, rather than taking no action and beneﬁting from ‘time in the market’.
If you have any concerns or questions, please never hesitate to contact our ofﬁces, as we are here to add value to both you and your investment portfolio.
Stay well and regards.
'Wealth vs Getting Wealthier by Morgan Housel' from Alan Botha
• Becoming famous is amazing. The amount of fame almost does not matter.
• Being famous is a mixed bag. Same with money.
• Losing fame is miserable.
The amount of fame almost does not matter. It is the trajectory that people cling to.Same with money. I think for many people the process of becoming wealthier feels better than having wealth. If it’s wealth we were after, most of us would feel great, because most of us are unfathomably wealthier than we were a generation or two ago. Or ten years ago. Or ﬁve years ago. Or two years ago!
What feels great is being on an upward path. That is when dopamine takes over. That is when you can extrapolate it and assume it goes on forever, and compare yourself to where you were before, and feel like nothing can stop you. When that path declines – even if it happens when you have a level of wealth you could not fathoma few years ago – the whole sensation shatters.
U.S. household net worth is $80 trillion higher today than it was ten years ago, which is astounding. But it is about $700 billion lower than it was three months ago, which is honestly nothing. Yet one of those ﬁgures creates ten times the headlines, ten times the attention, ten times the emotions, ten times the introspection. It has nothing to do with the level of wealth and everythingto do with the trajectory.
The problem is that an occasional downward path is inevitable in investing. Outside of fraud, it is completely unavoidable. The reason markets can go up signiﬁcantly in the long run is because they make you pay the cost of admissionof going down a lot in the short run.
When people are addicted to the act of becoming wealthier – the numbers going up more than just the numbers being big – and the numbers going down is an integral part of how investing works, of course you will ﬁnd some shattered souls. Some broken egos. Some terrible decisions being made.
Same in business.
Same in careers.
When most people hear this, they respond with the classic line, “It’s the journey, not the destination, that matters!” OK, most of the time that’s good advice. But here it is backwards. An addiction to the process of making money is a version of never having enough and never being satiated. It is a game that cannot be won but offers the illusion of a ﬁnish line right around the corner.
That is OK for some people – if you genuinely enjoy the game, that’s great. But I think that’s two percent of investors, including professionals. My sense is many people suffer naively through the game expecting it to end, and they are frustrated when it never does. Or they think they like the game, but what they like is numbers going up, which is half the game. An indifference to the process – the path of the journey – and a focus on the outcome and goal is the best most people can do with money. Or an acceptance of the process, knowing it will be a constant chain of surprise, volatility, setback, and disappointment, but if you can stick around long enough the odds of eventual growth and success are in your favour. That is vastly different from enjoying the process, which can quickly turn into an addictionto needing more.
Money buys happiness in the same way drugs bring pleasure: Incredible if done right, dangerous if used to mask a weakness, and disastrous when no amount is ever enough.
Short term news update from Greg Brits :
Electrical/Gas/Geyser Compliance Certiﬁcates
They also need to ensure that it is installed and complies with the new SANS regulation released end of July 2020 which requires a Compliance Certiﬁcate (also referred to as a COC). This may result in additionalcosts.
Current regulation also requires that when Electrical or Gas Installations are installed or changed that an updated COC is required.
It is therefore very important to use an Accredited Electrician / Plumber/Gas Installer.
If in the unfortunate event that you make use of a non-compliant electrician or plumber, you will then assume the full responsibility as the owner of the property, for the electrical and plumbing installation, which may result in a claims dispute or possible rejection.
Please remember to use your Insurer’s call centre where applicable, to ensure the process is handled correctly, and hence we urge all our loyal clients to contact our ofﬁce should you require any additional information in this regard. We would also like to take this opportunity and thank our clients for theircontinued support.