Its been an interesting 6 months where have seen extreme volatility in the market. We haven’t seen markets this challenging since the 1930s in the time of the Great Depression.
A key lesson to take from this competition is to take care when determining your risk profile and your investment strategy. Its important not to be put off investing in equities because everyone except the winner Pat, have less than the $10,000 they started with. The majority of his strategy was in the Cash Advantage Fund, which in very volatile times has proven to be the best option. Will interest rates rapidly falling its unlikely to be a good longer term strategy but its worked well in the last 6 months.
James & Jemmas holding was also mainly the Cash Advantage Fund. Without a doubt its been an awful time in the markets, buts its important to note that its one of only a few very tough times in the last century. The 4-5 years previous to the last 12 months was a boom time and investors were well rewarded.
Investing in equities provides excellent returns over the long term but you have to take the good with the bad. We obviously all want the good times, however its near impossible to always pick them and avoid the bad times. Think about how much risk (volatility) you are comfortable with, decide on your timeframes, then determine your risk profile before finalising your investment strategy.
Think through your investment decisions, do your homework and get professional advice. Congratulations to the winner Pat Dovovan and all those who participated in the competition.