|
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| • EXCH RATES |
|
Baht/$ 33.68/71
Bid/Ask
|
GOLD |
14,900
+ 200
|
|
NETWorth
ANDREW WOOD
Bears are currently on the rampage after having spent a longer than average time in hibernation. As in the wild, fund animals of a bear nature can be a handful to manage. From a different perspective, naive or complacent investors can easily get gored or trampled by the most good natured domestic bulls or seemingly safe stags.
Some things in life are plain common sense. Those who don't like aggressive animals should not play with them. Dangers arise when ignoring risk takes precedence over cutting losses or trading out of a situation as best you can to mitigate further losses.
Investors often buy into funds without paying attention to their pedigree, stability and suitability as befits their family circumstances and attitude to risk. Pet investments in mutuals, shares and index funds may similarly be bought from unstable cross-breeders at rates above fair market values, proving difficult to sell when temperaments turn sour. Some hold on to pet investments in the vain hope that conditions and finances will improve against the grain, despite prudent advice from experts to cut losses while options still exist.
Another staple caveat that should apply is that risks are substantially reduced even further when initiated in tandem with professional guidance. Professional asset protection strategies may not always guard against bites, but can certainly ensure that the investor is not gnawed to the bone or worse.
1. Big dogs bark: small dogs bite: Actuarial statistics prove to be true in many situations. Research and professional advice is thus important. Labradors and large caps will rarely bite their owners. They also survive bear and bull encounters through strength and adaptability. Investments into companies, or funds that invest collectively in various companies, should be risk-mitigated for less cautious investors.
2. Solid historically proven pedigrees: Funds, REITs (real estate investment trusts) and equities that have track records of paying dividends stretching back over 10 or even 20 years and more are logically the choice that proves capable of surviving the crashes of both past, present and future. When such institutions are capable of paying dividends, even in years when corporate profits fall, they are solid blue-chip investments. Dividend history pedigrees are thus an important research tool.
3. Debt factor risk issues: Investors can use gearing ratios of any fund or listed company to assess its debt liability. Gearing ratios are a combination of company debts over shareholder equity and perhaps other collateral asset holdings. Banks fall outside this protocol because they are lending institutions. UK banks are historically the safest of all to guarantee investor deposits.
4. Market sector diversification: This is a very important and critically strategic investment protocol to observe. No matter how long or damaging financial storms endure, over the years allocations in non-correlated diversification of assets is paramount in ensuring returns and simultaneously mitigating risks.
Blue chip High Yield Paying Shares (HYPS) should always play a role in a cautiously balanced portfolio. But the portfolio should be balanced by sector, currency and global diversity. Many factors come into play when structuring a portfolio with risk against returns.
5. Strategic ignorance influences: There are certain occasions when long-term strategies or securitised opportunities are prudently worth considering. Nobody can predict the future trends or profitability of most global securities. Hence, futures and commodity contracts are high-risk investments. Other influences can equally affect strategies. Friends and family are important considerations, but can be biased and inexperienced in global forces that ultimately affect all portfolios. Bank managers and domestic-based brokerages are largely "tied" advisers. They are thus not independent and cannot be relied on to act in the best impartial interest of you.
Therefore, as an expat investor you ought to balance strategies and advice in similar collective ways to maintain objectivity. Having done your research, set your return objectives and schedule goals. If you feel you would like to be an independent investor, the best advice is undoubtedly get a second opinion from an independent expert. Then you can initiate a mutually agreed strategy that you are happy and comfortable with.
Markets and seas may be stormy, but blue skies and safe waters are there in abundance. If you stick to the basic protocols of survival and take informed decisions, you will weather the storms.
Questions to the author can be directed to Barclay Spencer International on 0-2653-1971 or e-mail to info@barclayspencer.com
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