Despite the headlines, investors need to ignore the ructions over Greece and whether or not the country will leave the Eurozone. At the end of the day, it doesn’t really matter.
“Painful waiting game for investors,” says the Australian Financial Review, and another “Greece casts shadow on markets”
“Greece still concern” tweeted Commsec.
“Greece standoff keeps Asian markets off balance” from The Guardian
“Stocks slip on Greece worries,” says DailyFinance
Trust us, Greece has been in the news for the past 5 years, and it will probably still be in the news over the next five years.
Most ASX-listed Australian companies have very little business with Greece or even the Eurozone, so they are going to keep on going their merry little way, completely unaffected no matter what happens in Greece.
Investors also need to understand that at times of greatest uncertainty lies the opportunity to make hay while the sun shines.
The S&P/ASX 200 (Indexasx: XJO) (ASX: XJO) is flat over the past five business days, but has suffered a number of big falls recently, including more than 2% on June 29 and a combined 4.7% over just 3 days late last month.
Those investors panicking and selling out over that period really need to consider whether they are cut out for investing and perhaps think about handing their portfolios over to low-cost index fund managers.
It’s extremely tough to hang on and watch your portfolios sink, without taking any action. But that’s what we need to do if we want to outperform the market and generate decent returns on our investments. Trying to time the market or second-guess it is a fool’s (lower case ‘f’) game. No one can successfully pick the top of the market to sell out at or the bottom to buy back in on a consistent basis – no matter how many technical chart patterns they use.
It always pays to remember that the most successful investors hang on, stay invested and focus on the long term. If you’re not going to need to sell your shares for another 5, 10 or 20 years, your shares will almost certainly be higher than they are now – provided they are quality companies of course.
Perhaps the only thing we need to do is keep an eye on those stocks we’d like to have in our portfolios, and those we’d love to own more of and stock up as the price falls – whether its Greece or other short term issues.
I’ve recently done exactly that, topping up my holdings in Flight Centre Travel Group Ltd (ASX: FLT) and adding REA Group Ltd (ASX: REA) to my self-managed super fund. Short-term or cyclical issues are often confused as long-term threats to quality businesses.
Think hearing implant maker Cochlear Limited (ASX: COH), when its shares plunged to $45.11 in 2011, or investment bank Macquarie Group Ltd (ASX: MQG) also in 2011, when shares fell as low as $19.61. Cochlear shares are now above $82 and Macquarie above $83.
We may look back at REA Group in 5 years’ time and say, “We should’ve bought shares when they fell under $40”, or Flight Centre at around $34.
It’s always easy in hindsight, but following a Foolish (capital ‘F’) investing path should give you an advantage over those investors who panic when their shares fall a few percent, or sell out when the going gets tough. Get your watchlist ready, we may have more opportunities ahead.