4 words that frighten a $180 billion fund manager

AustralianSuper chief investment officer Mark Delaney shakes his head whenever he hears this at a barbecue.

falling asx share price represented by business man wearing box on his head with a sad, crying face on it

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

Mark Delaney manages one of the biggest lumps of money in Australia.

Since 2006 he has been chief investment officer for AustralianSuper, which now has more than $180 billion under management.

One out of every ten Australians rely on him to maximise their retirement nest eggs.

So Delaney knows a thing or two about investing, and has heard all the barbecue talk about how to grow your money.

So what's the cliché that frightens him the most for retail investors?

"There's no more dangerous words in investing than 'this time it's different'," he said at the Yahoo Finance All Markets Summit.

"Every time people say 'this time it's different', you should probably do the opposite."

Is it different this time in 2020?

COVID-19 has made for an unprecedented 2020, which could well cause permanent changes to the way we live and work.

And that's had some thinking whether the fundamentals of investment have also shifted.

Plenty of newbies have dived into the sharemarket this year, pouring in what fund manager Geoff Wilson called "non-sophisticated money".

Financial authorities and veteran investors are worried that many are in to make a quick buck and could plunge themselves into horrible trouble.

This is why Delaney advised investors to resist this short-sightedness and go long.

"The biggest risk in investing is not that you lose money in the short term," he said.

"But it's that your investments don't deliver what you want them to in the long term."

Good times follow tough times

It's a well-known investment axiom to stay the course during tough times.

But it's easier said than done when emotions take over during a global recession.

Many superannuation account holders this year would have changed their investment mix to increase their proportion of cash.

For Delaney, this doesn't make sense, because investing is for the future, not the present.

"It's like driving your car on high beam. You're not looking at the next bend — you're looking at the bend after and the one after that," he said.

"That's what investing is, looking at what's beyond what you can see in front of you."

The Reserve Bank of Australia and central banks around the world have declared low interest rates will be around for many years to aid recovery.

So for Delaney, it makes sense to put your money into the inevitable recovery out of the pandemic.

"It doesn't make any sense to invest in lower rates," he said.

"Why don't we invest in things that will benefit from the recovery in the economy, growth in earnings and businesses that are taking advantage of the structural changes that are taking place."

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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

Two elderly men laugh together as they take a selfie with a mobile phone with a city scape in the background.
Dividend Investing

4 ASX income stocks for Aussie investors to buy now

Income investors might want to check out these buy-rated stocks.

Read more »

Excited woman holding out $100 notes, symbolising dividends.
Dividend Investing

This 6% ASX dividend stock can pay $100 cash every month

If I wanted dividend cash up front, every month, I'd go with this stock.

Read more »

Man holding fifty Australian Dollar banknote in his hands, symbolising dividends, symbolising dividends.
Dividend Investing

3 ASX dividend shares to buy with 6%+ yields

Analysts think these stocks are top options for income investors and expect yields of 6%+.

Read more »

Excited woman holding out $100 notes, symbolising dividends.
Dividend Investing

Bell Potter says these ASX dividend shares are top buys this month

The broker says these shares are in the buy zone right now.

Read more »

A man has a surprised and relieved expression on his face. as he raises his hands up to his face in response to the high fluctuations in the Galileo share price today
Small Cap Shares

Guess which small cap ASX stock could rise 50% in a 'transformational year'

This small cap has been tipped to rise materially from current levels. But why?

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Growth Shares

2 ASX 200 compounding machines to buy and hold forever

Analysts think these shares could be great long term options for investors.

Read more »

Tax time written on wooden blocks next to a calculator and Australian dollar notes.
Tax

Don't forget your franking credits this tax time

Franking credits form an important part of your returns from your dividend shares.

Read more »

People sit in rollercoaster seats with expressions of fear, terror and exhilaration as it goes into a steep downward descent representing the Novonix share price in FY22
AI Stocks

Brainchip share price tumbles 40% in the past year. What's next?

Brainchip shares have had a topsy-turvy year. So, what’s next for this speculative ASX AI technology stock?

Read more »