Weekly Thoughts 22 May 2015

I spent the better part of eight hours this past week attending sessions of one kind or another. Four hours in an ethics orientated workshop on industry and practice management changes expected to be imposed upon us by the regulators – some of which will be very good, then a couple of hours listening to each of Coronation, Allan Gray and Orbis asset managers.

Many of the industry changes looming will be difficult for many advisors and financial service providers to cope with. Many practices are still run as they have for 20 years, and with the average age of advisors in the industry somewhere around 58 years old I think, change is difficult. Especially when it requires new vision.

Coronation’s message really came through as one of saying “markets that are driven by momentum will vary greatly over 12 to 24 months and an investor should look to a time frame of at least 5 years.” They are talking about growth assets here. I would agree with them but take it further: 7 to 10 to 15 years. Momentum in this context means the sheep following syndrome, for lack of a better analogy. A share’s price begins to rise and everyone jumps on board and buys. Or it drops and the selling frenzy starts, even if the company is solid and making money. Etc.