After five years of standing firm on Solomon Mahlangu Drive, Momentum Investments’ billboard with an important message recently came down. Momentum Investments intended the billboard to stay unchanged for five years, in contrast to the changes commuters would see daily.
Since then, Solomon Mahlangu Drive has been upgraded with additional lanes, large housing projects are underway, and the new Castle Gate Shopping Centre has been added. The road is now a major arterial road linking Pretoria East with its surrounding areas. And the world has also changed. Within a few months of putting up the billboard, the whole planet was dealing with the effects of COVID-19. Its message to commuters: ‘When the world changes, your investment goals shouldn’t’, was to highlight the importance of long- term thinking in uncertain times.
Although the billboard had some slight alterations – a countdown with years and months was added – and was stolen and had to be replaced, the main message always stayed the same: ‘When the world changes, your investment goals shouldn’t.’
‘Too often, investors are distracted by market trends, hype, and a short-term news cycle. As a result, they are prone to making short-term investment decisions that are not aligned with their long-term goals,’ said Fränzo Friedrich, Head of Marketing at Momentum Investments.
It’s a pattern Momentum Investments tracks closely. According to the latest Behavioural Science of South African Financial Decisions (Sci-Fi) Report, investors lose millions due to poorly timed switches between funds.
When markets fall, switching activity spikes. Switching activity gradually increases as panic sets in, investors move to safety and then scramble to get back into markets in the recovery. Many investors sell ‘low’ and buy back ‘high’, if they ever return to the market.
This ‘behaviour tax’ highlights exactly the kind of short-term thinking Momentum Investments warns against. As Friedrich reflected, ‘2020 was a watershed year, and its ripple effects are still being felt. Today, we live in a world that is constantly shifting and with increased volatility, it has never been more important to stay focused on long-term goals. Our research makes it clear: many investors are prone to making short-term investment decisions not aligned with their long-term investment goals. They rush for safety and get stuck in safe asset classes where they remain for a large portion of the inevitable market recovery.’
The Momentum Investments’ billboard on Solomon Mahlangu Drive remained (mostly) unchanged for five years while everything around it evolved. Just as the billboard stood steady amid the shifting landscape, investors should be reminded of the value of staying the course amid constant change. Because while everything else may change, your investment goals shouldn’t.
MOMENTUM
www.momentum.co.za/momentum/personal
