How investors handle uncertainty? - October 09, 2016

How investors handle uncertainty?

There are always some uncertainties and concerns on the market, no matter how safely we try to invest. Investors however have a great technique handling these problems: a new survey conducted by Barclays Research showed again how important patience is for professionals.

Business Insider wrote about the survey which was based on the opinion of 907 global investors. As they stated, geopolitical risks became the most important concern of investors, and among them the most serious was the outcome of the US presidential election on 8th November.

But the most important thing we can find in the survey is that investors haven’t really done anything about their fears yet. As Business Insider wrote “the lack of movement isn't a huge surprise, as many investors have long-term strategies that they expect may not be materially impacted by the outcome of the race”. We can understand this even better if we look at the graph they made of the survey:

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As we can see, almost half of them are not planning to change their strategies, and many of them are just waiting for something more serious to make their steps. The first presidential debate was a key date, but investors didn’t do anything very serious then either. (Small movements were on the market.)

To be fair, there are other important factors that make investors worried, just to name the two most important: the instability of Chinese economy and the weak developed market growth.

In the past we also wrote about the importance of patience and now it seems others agree with us as well. The legendary Andrew Tobies emphasized the same before: „think long-term and leave your investments alone”.

Generally speaking, probably the best investment for the most of us is a long term (5-10 year), professionally diversified portfolio. This way, investors have their best chance to minimize risk while still earning profit.

Disclaimer: Innovative Securities’ Profit Max has a highly diversified portfolio, containing more than 120 instruments in more than 20 markets. Investing in this portfolio can lower the risks, while still grant great returns to our partners: in the last 5 years, our portfolio performed better than the S&P500 Index.