Speaker 1: You're listening to a Sheasise podcast.
Speaker 2: One of the criticisms often leveled at the US markets
Speaker 2: is that they're just they're topping out, They're just keeping
Speaker 2: on going, and all of a sudden there's going to
Speaker 2: be a crash and people are going to burn as
Speaker 2: a result. I mean, what do you sort of say
Speaker 2: to investors in terms of keeping that longer term view,
Speaker 2: knowing that markets, as you said before, go up and
Speaker 2: go down.
Speaker 1: Yeah, it's important to just think of that long term
Speaker 1: time horizon. If we look at twenty twenty two, the
Speaker 1: sixty forty portfolio we mentioned earlier had one of its
Speaker 1: worst years and since nineteen thirties because both stocks and
Speaker 1: bonds were down together, which is rare. So you know,
Speaker 1: that was a clear example of a time where people
Speaker 1: were feeling a little bit of the pain of the
Speaker 1: market and having that drawl down. But those that stayed
Speaker 1: in it, that return we've seen since twenty twenty two
Speaker 1: is almost forty five percent in the S and P
Speaker 1: five hundred and it is sixty to forty portfolio would
Speaker 1: be muted a bit to that, but it's still you know,
Speaker 1: that growth that you've had in that time period by
Speaker 1: just staying the course and staying focused on your long
Speaker 1: term plan and not reacting to short term market events
Speaker 1: even if they aren't. You know, it's not easy to
Speaker 1: see on your portfolio when the number goes down, but
Speaker 1: it's really important, and we've showcased over time this. You
Speaker 1: know what happens when you get out of the market
Speaker 1: when the time is in stress and you miss that,
Speaker 1: you know, return to positive returns. What that does with
Speaker 1: the long term investment because of the impact of compounding
Speaker 1: is quite great. So we really try to reinforce to
Speaker 1: tune out the noise that's in the market and really
Speaker 1: just be focused on if your plan is twenty years
Speaker 1: from now, your portfolio doesn't need a lot of change
Speaker 1: right now to be able to achieve the goals that
Speaker 1: you have for your long term investment returns.
Speaker 2: What would you say to New Zealand investors who are
Speaker 2: thinking for the first time to invest in the US
Speaker 2: markets that might have played around a little bit with
Speaker 2: individual stocks, but perhaps now they're thinking exchange traded funds
Speaker 2: is probably an easier, cheaper, maybe safer way to go.
Speaker 1: Yeah, I mean I think that it's we do, you know, stress,
Speaker 1: the importance of diversification, and that is something that ETF
Speaker 1: gives you. You can trade it like a stock within
Speaker 1: the market, but it still gives you the broad exposure
Speaker 1: of what the underlying portfolio is made up of, and
Speaker 1: in this case, it's the five hundred largest companies in
Speaker 1: the US. So that diversification that you get over choosing
Speaker 1: one single stock really is an important risk mitigation tool.
Speaker 1: When we look at securities over time, the number one
Speaker 1: security and the S and P five hundred at you know,
Speaker 1: in two thousand and five, in nineteen ninety five and
Speaker 1: nineteen eighty five, it's different every time you look, because
Speaker 1: you know markets are going to you know, there's just
Speaker 1: different situations for different securities that are going to increase
Speaker 1: their value or decrease. So having that broad exposure instead
Speaker 1: of maybe even looking at you know, everybody looks at
Speaker 1: We just take Nabidia as an example, because of the
Speaker 1: great ride that it's had. Everybody wants to have the
Speaker 1: number one stock in the market, but the video won't
Speaker 1: always be the number one stock in the market. And
Speaker 1: how are you diversified when there is a drawl down
Speaker 1: there if the valuation might get too high. The rest
Speaker 1: of the portfolio helps to kind of pick that up.
Speaker 1: So we really just stress that diversification. We think this
Speaker 1: gives a great opportunity to get that and a wrapper
Speaker 1: that again is really low cost and easy to access.
Speaker 2: Diabet There's a phrase online where people say voo and chill.
Speaker 2: Just wondering what your take on that is.
Speaker 1: Yeah, it's it's a funny phrase that you know, I
Speaker 1: think we are starting to see follow in the lexicon
Speaker 1: a little bit more, and it's really to me, it
Speaker 1: resonates a lot of what I just mentioned. It's you know,
Speaker 1: you don't have to get complicated in the market. You
Speaker 1: don't have to be chasing returns or looking for opportunities
Speaker 1: to maybe find the next hot product. Just buy voo,
Speaker 1: buy vu and and chill. Just you know, kind of
Speaker 1: sit on that, continue to invest it as you have
Speaker 1: new moneies go into it. And because what we see
Speaker 1: is over the course you know, long dated period, say
Speaker 1: fifty years as the longest, only about two percent of
Speaker 1: active managers can beat the index. So instead of chasing
Speaker 1: some of those returns from that active management or some
Speaker 1: of those strategies, buying the index, that whole index and
Speaker 1: just you know, sitting it out and just waiting for
Speaker 1: the long term or voo and chills, as can be said,
Speaker 1: is really a you know, we think a really great
Speaker 1: strategy to just get those long term investment returns that
Speaker 1: we talked about. Investing involves the risk you might lose
Speaker 1: the money you start with. We recommend talking to a
Speaker 1: licensed financial advisor.
Speaker 2: We also recommend reading product disclosure documents before deciding to invest.
Speaker 2: Everything you're about to see and here is current at
Speaker 2: the time of recording.