The instinctual triggers from our Lizard Brains probably ensured the mass survival of our cave-dwelling ancestors. But that fight or flight mechanism has now become the investor equivalent of an inflatable zimmer frame – guaranteed to let you down the moment you lean on it.
Simply investing in the fund(s) that have performed best in the last twelve months is almost guaranteed to lead to lesser returns in the long term.
George Osborne said recently that it was time to ensure Maths is taught to all under 18-year-olds. Apparently too many in that cohort don’t understand pensions, investments etc. Well basic arithmetic is all you need, and what’s called “The Rule of 72″.
There’s an old ‘Lion’s Parable’ about a family that took in an abandoned cub who, despite being loved and cared for by the family, once grown decided to eat them all. Ouch! And in a not-so-obscure way that parable, and recent events, remind me of what’s going on with oil in the minds of investors.