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Time for a reality check

08 May 2006 Angelo Coppola

Anil Thakersee, OMAM says that the last three years have been nirvana for local investors, with low volatility and high returns but complacency should be guarded against. More importantly investors need to identify their investment horizons.

Looking forward, the mean reversion theory states that all returns move back to long-term historical averages.

The graphs all show that this theory is provable, especially when there is a +30% increase in returns for a three year rolling return basis, as the statistics show that there is a correction following the increase.

Interestingly the 10 year rolling return is just above the long term rolling basis.

The returns won't be sustained he says. The reality is that the long term relationships (10 years) show that local equities should be giving you nominal returns of 13%, bonds providing 7.5% and property giving investors 9%.

People should be looking at their portfolios as the returns may have moved the emphasis from a general balanced portfolio to one of a specific risk portfolio.

Quick Polls

QUESTION

Do you believe this is the toughest period for financial advice in many years?

ANSWER

Yes, it’s hard to navigate the challenges and difficult to adapt. I’m struggling.
No, I have managed to navigate the challenges and have adapted. I’m good.
50/50. I just feel like whether we like it or not, we have to ready ourselves for change… be resilient and scale for the future. It’s not about survival of the fittest anymore but survival of the quickest. We just have to move on with life.
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