Wednesday, August 26, 2009

When is a good time to invest?

by Robin Bowerman

The worst must be over. Investing is back on the acceptable list of dinner party conversation topics.

A few short months ago bringing up almost anything to do with investing – super or sharemarkets in particular – was a real party conversation stopper. People would quietly move away to start up a conversation about something more interesting – anything was more interesting than super.

But it’s back. At this point the behavioral finance academics are all nodding sagely and reminding us that our emotional drivers should not be underestimated – losses hurt both our portfolios and our egos. Denial arrives and people stop looking – and talking - about it.

Then along comes a 40% rally on the Australian market since early March and suddenly its OK to be talking shares and super again.

Hindsight is a wonderful thing but it would have been really insightful to have surveyed a group of investors back in early March and asked them whether they thought it was a good time to invest...

...Who couldn’t make a fortune with the benefit of hindsight.