Sam Instone is co-chief executive of wealth management company AES
April 26, 2024
Smart long-term investors generally have a good understanding of the mindsets and behaviours that lead to financial success.
They diligently act on a solid plan and have thought through the various trade-offs that all financial decisions demand.
However, even the best of us are still human. While the principles of smart investing may be simple to understand, they’re certainly not easy to act on consistently.
Every significant world event affects our financial system. These events typically evoke emotions that, when acted on, can be detrimental to our financial health.
Unfortunately, emotions are highly contagious, and when these emotions make it harder to be good investors, we must be careful about how we proceed.
Successfully dealing with these temptations is what separates good investors from great investors.
Temptation 1: Forecasting the economy
Economists are charged with understanding how our economy functions. They help us understand the relationships between interest rates, inflation, economic growth and other factors. Their knowledge informs policy decisions that feed through the entire global economy.
However, they inevitably get seduced by the financial media into making predictions of the economy’s vital markers.
While understanding the current trajectory of crucial metrics helps understand the market’s current position in a cycle, relying on these metrics to make outright forecasts that tempt long-term investors into making financial planning changes is very dangerous.
Not many newspapers are sold by predictions of a slow reversion to the mean, so we expect the outrageous predictions to continue.
However, the reality is that making accurate forecasts about variables highly dependent on one another is a fool’s errand.
The success rate of past forecasts has been woefully bad, which makes sense as the trajectory of all variables is mainly dependent on future events that are currently unknown to us.
It might be fun to stay informed on the economy, but being caught up in the likely short-term changes does not make it easier to be a long-term investor.
Temptation 2: Timing investment markets
Linked to the first temptation of forecasting the economy comes the investor’s biggest temptation of all: the misplaced confidence that the investment market’s volatile cycles can be timed consistently.
The economic metrics we’ve discussed are usually lagging metrics that tell us what’s recently happened.
The market, made up of millions of investors (all with their own objectives), is a forward-looking organism.
In aggregate, it tries to discount future events and cash flows into a market price investors can trade on.
The reality is that stock markets are highly unpredictable, often reacting in ways that are confusing even to seasoned investors.
A television pundit trying to summarise why the global market moved in a specific direction on a particular day is, unfortunately, nothing more than an attempt to fill airtime.
The unvarnished truth is that we don’t know why the market behaves the way it does.
Trying to guess when markets are about to go down so that we can profit or run for cover has cost many investors their fortunes.
The long-term investor’s focus is better directed at ensuring that they’re invested in the right asset mix, controlling their expenses, making heavy contributions, and understanding that their behaviour is vital to their financial success.
A better way
While the current moment always feels more uncertain than past events, we know the ending.
Most investors can agree that we never really have any certainty about the immediate future. History is just a long list of surprises we were dealt, which we ultimately navigated in the best way we could.
The current economy has potential risks, as every economy always has. Our minds are extrapolating machines, but assuming that recent trends will continue indefinitely is unrealistic and not helpful in our quest to make smart financial decisions.
The current investment market is also no more uncertain than ever. While we invest with certain average return expectations, the short term will almost always be volatile in both directions.
Avoiding the temptation to time these cycles is the intelligent investor’s most important skill.
We permit you to opt out of these unwinnable games. Your time and energy are better spent remaining clear about what’s important to your family over the long term.
Sam Instone is co-chief executive of wealth management company AES
The rules on fostering in the UAE
A foster couple or family must:
be Muslim, Emirati and be residing in the UAE
not be younger than 25 years old
not have been convicted of offences or crimes involving moral turpitude
be free of infectious diseases or psychological and mental disorders
have the ability to support its members and the foster child financially
undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Have an up-to-date, professional LinkedIn profile. If you don’t have a LinkedIn account, set one up today. Avoid poor-quality profile pictures with distracting backgrounds. Include a professional summary and begin to grow your network.
Keep track of the job trends in your sector through the news. Apply for job alerts at your dream organisations and the types of jobs you want – LinkedIn uses AI to share similar relevant jobs based on your selections.
Double check that you’ve highlighted relevant skills on your resume and LinkedIn profile.
For most entry-level jobs, your resume will first be filtered by an applicant tracking system for keywords. Look closely at the description of the job you are applying for and mirror the language as much as possible (while being honest and accurate about your skills and experience).
Keep your CV professional and in a simple format – make sure you tailor your cover letter and application to the company and role.
Go online and look for details on job specifications for your target position. Make a list of skills required and set yourself some learning goals to tick off all the necessary skills one by one.
Don’t be afraid to reach outside your immediate friends and family to other acquaintances and let them know you are looking for new opportunities.
Make sure you’ve set your LinkedIn profile to signal that you are “open to opportunities”. Also be sure to use LinkedIn to search for people who are still actively hiring by searching for those that have the headline “I’m hiring” or “We’re hiring” in their profile.
Prepare for online interviews using mock interview tools. Even before landing interviews, it can be useful to start practising.
Be professional and patient. Always be professional with whoever you are interacting with throughout your search process, this will be remembered. You need to be patient, dedicated and not give up on your search. Candidates need to make sure they are following up appropriately for roles they have applied.
Arda Atalay, head of Mena private sector at LinkedIn Talent Solutions, Rudy Bier, managing partner of Kinetic Business Solutions and Ben Kinerman Daltrey, co-founder of KinFitz
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
The flights
Whether you trek after mountain gorillas in Rwanda, Uganda or the Congo, the most convenient international airport is in Rwanda’s capital city, Kigali. There are direct flights from Dubai a couple of days a week with RwandAir. Otherwise, an indirect route is available via Nairobi with Kenya Airways. Flydubai flies to Kinshasa in the Democratic Republic of Congo, via Entebbe in Uganda. Expect to pay from US$350 (Dh1,286) return, including taxes. The tours
Superb ape-watching tours that take in all three gorilla countries mentioned above are run by Natural World Safaris. In September, the company will be operating a unique Ugandan ape safari guided by well-known primatologist Ben Garrod.
In the Democratic Republic of Congo, local operator Kivu Travel can organise pretty much any kind of safari throughout the Virunga National Park and elsewhere in eastern Congo.
Are non-fungible tokens a currency, asset, or a licensing instrument? Arnab Das, global market strategist EMEA at Invesco, says they are mix of all of three.
You can buy, hold and use NFTs just like US dollars and Bitcoins. “They can appreciate in value and even produce cash flows.”
However, while money is fungible, NFTs are not. “One Bitcoin, dollar, euro or dirham is largely indistinguishable from the next. Nothing ties a dollar bill to a particular owner, for example. Nor does it tie you to to any goods, services or assets you bought with that currency. In contrast, NFTs confer specific ownership,” Mr Das says.
This makes NFTs closer to a piece of intellectual property such as a work of art or licence, as you can claim royalties or profit by exchanging it at a higher value later, Mr Das says. “They could provide a sustainable income stream.”
This income will depend on future demand and use, which makes NFTs difficult to value. “However, there is a credible use case for many forms of intellectual property, notably art, songs, videos,” Mr Das says.
