Livewire readers' top advice: Be patient, don’t panic, and diversify
When it comes to the stock market, there is plenty of advice flying around. And I’m not talking about research notes from investment banks. I’m talking about the soundbites that people trot out in casual conversation at dinner parties. You know the advice I'm talking about; “Buy the rumour…”, “It’s not timing the market…”, “Cut your losses and…”, “Sell in May…”.
If you were able to complete any of the sayings above, then you’ve been doing this long enough to know what I am talking about. And while these sayings have become cliched and perhaps lost some of their original cachet, it does not mean they're worthless. Overused perhaps, but not worthless. That said, the best advice these days is typically borne of experience and is expressed in the voice of the person giving the advice. Ultimately, it is genuine.
As part of the 2023 Outlook Series survey, we asked Livewire readers for their best pieces of advice. And let me tell you, there were some fantastic responses based on real-life experience and a genuine desire to help others on their journey.
Let’s start with the general and move to the specific.
Of all the responses to this question, approximately 5% were along the lines of ‘be patient’. This is a sign of the times, no doubt, but also a reflection of the long-term outlook we know most Livewire readers employ.
The next most popular, in yet another sign of the environment we are operating in, was ‘don’t panic/stay calm’. The third most popular piece of advice, with approximately 1.8% of the vote, was ‘diversify’.
The holy trinity consists of being patient, not panicking, and diversifying. This is sage advice in the current market environment and, in fact, in any market environment.
Top 10 general pieces of advice
|2||Don't panic/stay calm
|4||Do your research
|5||Think long term|
|6||Buy low, sell high|
|7||Spend less than you earn|
|9||Take advantage of compounding|
|10||Stay the course/hang in there|
Some stand-out responses
For those who like a little more qualitative and specific advice, here are some of the top responses. And a big thank you to readers who took the time to share their experiences and pay it forward – there is plenty of advice in there from seasoned campaigners who are passing wisdom to younger generations. There is also plenty of honest self-reflection.
Please note, these have been edited for this article
- Greed and fear are states of mind. Invest in quality stocks and live life with no worries
- Follow the track record of the CEO
- At the mature stages of the investment cycle (approx. every decade or so) you need to have the courage to make some strong calls. For example, not having expensive bonds with no diversification benefits in clients' portfolios for the last two years, and be patient for your calls to play out.
- Take advantage of the current economic uncertainty to revisit and question your convictions and always remember, today you won't know as much as you do tomorrow.
- The first issue to be addressed is to establish your net worth, that is, the value of your assets versus liabilities. The sooner in life you do this exercise, the sooner you will become aware of your wasteful spending habits and make adjustments so that you have sufficient funds to achieve your retirement goals.
- I'm not experienced enough to give financial tips (even though I should be at my age). So, I guess my advice would be to start learning about finances early in life. I wish I had understood the importance of starting early.
- Let go of regrets. Holding onto suboptimal decisions that you’ve made will see you waste time thinking about the past, instead of focusing on the present and the future. If you cannot change what you did in the past, learn from it and then let it go.
- Start a portfolio of stocks as early in life as you can. First, create a dummy portfolio of 10-20 stocks. Watch most of them tank over the following year(s). Learn from those mistakes. Start again, committing only a small amount of excess savings. Repeat.
- The biggest advantage retail investors have is being nimble. It doesn't make sense to invest like fundies, where they are constrained by so many variables. Of course, the failure rate is high, but the rewards are there for those who are willing to put in the work.
- Probably a quarter of the companies listed on the ASX are good businesses. Buy those. The rest are good stories. Don't buy those. Learn how to spot a good business management team.
For a laugh
There were always going to be some humorous responses in the pile, and here are a few that left a smile on my face… for one reason or another.
- Only go to the races with the money you are prepared to wipe your backside with.
- Inflation is not transitory.
- No one agrees, so do your own research.
- Don't panic, stay long-term focused - unless you are old. Then panic.
- Keep away from Bitcoin.
- Ignore everyone.
There you have it, Livewire readers: your advice to each other. Thanks to all those who participated, we appreciate you getting involved in the community spirit.
If you have any pieces of advice you would like to share, please post them in the comments section below.
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