The solution many writers have adopted is to offer an increasingly more extreme view - with a hyperbolic headline, i.e. making as big a splash as possible by exploiting society’s increasingly insatiable demand for byte sized information. As a result, balanced, centrist views are rarely offered as they are drowned out by the shrillest voices. Even mainstream media headlines have become more extreme and no longer provide moderate, balanced investment advice. More likely, one will find extreme headlines designed to capture maximum attention. We now see headings like ‘Stocks are dead’, ‘Bonds are dead’, ‘Gold is dead’, ‘Buy and hold is dead’ and ‘Oil is dead’. We just now await the granddaddy of them all – “We are all dead.”
As professional financial advisers, we are concerned that New Zealanders are not getting the real message and instead are more willing to rely upon repeated bombardment of negative financial news. There is no denying that the investment markets have been poor over recent years. There are still many uncertainties in our world but the fundamentals are starting to slowly improve and this creates opportunities. Our concern is that New Zealanders may miss out on the inevitable recovery in equity markets as they are only receiving sensationalist views from media sources.
Pimco, the world’s largest bond manager, holds the consensus view that investment returns will be lower going forward. However, equities (the share market) are likely to outperform bonds in coming years and Pimco offers the following balanced view point:
Holders of large portfolios can potentially buy individual stocks and create a diversified portfolio. However, for the average investor, a portfolio that incorporates high quality active fund managers is most likely to be the solution for obtaining the most appropriate risk adjusted return. Milestone works with Morningstar (one of the leading investment research companies in the world) to identify low cost, well run investment funds for clients.