The title quotation from baseball player and then coach Yogi Berra must surely sum up what a lot of people are feeling about recent market gyrations.

The financial markets are once again having one of their periodic panics that the financial media love to write dramatic headlines about.  These headlines cause investors to panic, with many selling their investments in, what they believe is, a flight to safety.  The reality is that the vast majority will still be scared once the market starts moving back up and will miss out on most of the rise in markets.

These fears are natural and need to be addressed.  We have devoted quite a bit of the forthcoming book to how to manage your investing behaviour but hopefully the following might provide some useful perspective.

Not all is doom and gloom

At the same time that the majority of headlines have been overwhelmingly negative the following facts illustrate that not all is doom and gloom in the world. In some areas, economic progress is being made:

  • Robust Growth in Germany Pushes Prices: Analysts see a strong chance that German inflation will head towards 3 per cent by the end of the year against a backdrop of robust growth in Europe’s biggest economy. (Reuters, July, 27, 2011)
  • Brazil Domestic Demand Still Strong: The Economist Intelligence Unit says economic growth in Brazil surprisingly picked up speed in the first quarter, challenging the government’s efforts to cool the expansion (EIU, July 6, 2011)
  • Japan Retail Sales Top Estimates: Japan’s retail sales rose 1.1 per cent in June, exceeding all economists’ forecasts and adding to signs the economy is bouncing back from an initial post-disaster plunge (Bloomberg, July 28, 2011)
  • No Fear in China: Traders betting on gains in China’s biggest companies are pushing options prices to the most bullish level in two years. The Chinese economy is projected to grow by 9.4 per cent in 2011. (Bloomberg, July 28, 2011)
  • Southeast Asia Booms: Southeast Asian markets are the world’s top performers in 2011 thanks to strong economic and corporate fundamentals.  Thailand’s index hit a 15-year high in July and Indonesia’s a record high. (Reuters, July 22, 2011)
  • Australian Boom Keeps Rate Rise on the Agenda: The Australian dollar hit its highest level in 30 years in late July as traders looked to the prospect of another rise in interest rates on the back of a resource investment boom. (WSJ, July 27, 2011)
  • NZ Bounces Back: The New Zealand economy has grown more strongly than expected after the Christchurch earthquake, helped by improving terms of trade.The Reserve Bank signals it may raise interest rates soon. (Bloomberg, July 28, 2011)

Don’t let yourself be blinded by the bad news that sells newspapers.

In addition, a properly diversified portfolio will never move in sync with the major stockmarket indices.  By including high quality bonds in your portfolio you help protect yourself against the worst of market falls and ensure that should you need access to cash. Most bond funds focussed on very high quality, short duration bonds have performed well so far this year.

As ever the ‘Sage of Omaha’, Warren Buffet, has good advice for investors tempted by trying to time their exit from and entry back into the markets:

“Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy when others are fearful.”

We don’t know whether the recent market turbulence will be as long lasting as the crisis of 2008/2009 and neither does anyone else.  One thing is sure however, we will continue to recommend investors stay disciplined and stick to their strategies.  As ever however, it’s best to talk to someone about your concerns and seek the reassurance you need.