TALKING FINANCE with Michelle Higgerson of Baiocchi Griffin Private Wealth SEASONS CHANGE After a bit of a late arrival, summer is well and truly here... still. While warmer conditions are preferrable to the darkness, drabness and dreariness of winter, the relentless run of thirty-five plus degree days we've had since mid-December is starting to wear thin on my patience. It currently feels as if summer is here to stay permanently, and with the weather forecast predicting another week full of high temperatures and zero rainfall, I suspect you're feeling the same way too. With summer dragging on the way it is, frustration levels start to increase, and in these moments of frustration, people have a tendency to turn to extreme behaviours to try and manage their current conditions. What can be difficult to remember during the height of summer, though, is that eventually the weather will turn, conditions will temper, and eventually the much chillier weather will be upon us. And then we start complaining about the cold! To avoid extreme behaviours becoming a thing of permanency, we should remember that change is inevitable and this too (whatever that is) shall pass. So, before you start bricking up the windows of your house to avoid any sunlight coming in, perhaps first consider whether you will wish for pleasant sunshine beaming through the windows once sinter inevitably rolls around. Enduring moments of discomfort and frustration are not just reserved for the weather; the ebbs and flows of the sharemarket can have the same impact upon investors. Similarly, in such moments of discomfort, investors can also turn to extreme behaviours, including those which have permanent effects. While it can feel like the unsettling periods are enduring and unlikely to ever improve (in America the average length of a market crash is 338 days), the big lesson throughout the history of investing is that eventually, conditions do improve. In fact, when a bull market follows a market crash it is typically for a longer period than the crash itself (noting of course that history doesn't repeat, but it does rhyme). Therefore, had you resorted to extreme behaviours during a downturn, such as cashing your investments in or moving entirely to fixed term deposits, you likely missed out on the upside once conditions turned. One simple method to overcome the propensity for extreme behaviours is to have a portfolio that is diversified across all the various asset classes, ideally including a mix of assets whose performance characteristics are uncorrelated to each other. That way, whether the sharemarket is moving upwards, sideways, or downwards, the temptation for knee-jerk reactions to be made (with permanent consequences) is removed. You can then focus on complaining about the weather and not the sharemarket. BAIOCCHI GRIFFIN PRIVATE WEALTH Level 1, 462-464 Peel St, Tamworth NSW 2340 6766 9000 AFSL No 424658 This article is general in nature and does not take your individual situation into account. You are advised not to act on anything contained herein, or discussed as a consequence of the contents of this document, without receiving financial advice from a suitably qualified person such as a financial planner, lawyer or accountant. Follow us on Twitter @BaiocchiGriffin facebook.com/Baiocchi GriffinPrivate Wealth Find us on Facebook www.bgprivatewealth.com.au AW7431077 TALKING FINANCE with Michelle Higgerson of Baiocchi Griffin Private Wealth SEASONS CHANGE After a bit of a late arrival , summer is well and truly here ... still . While warmer conditions are preferrable to the darkness , drabness and dreariness of winter , the relentless run of thirty - five plus degree days we've had since mid - December is starting to wear thin on my patience . It currently feels as if summer is here to stay permanently , and with the weather forecast predicting another week full of high temperatures and zero rainfall , I suspect you're feeling the same way too . With summer dragging on the way it is , frustration levels start to increase , and in these moments of frustration , people have a tendency to turn to extreme behaviours to try and manage their current conditions . What can be difficult to remember during the height of summer , though , is that eventually the weather will turn , conditions will temper , and eventually the much chillier weather will be upon us . And then we start complaining about the cold ! To avoid extreme behaviours becoming a thing of permanency , we should remember that change is inevitable and this too ( whatever that is ) shall pass . So , before you start bricking up the windows of your house to avoid any sunlight coming in , perhaps first consider whether you will wish for pleasant sunshine beaming through the windows once sinter inevitably rolls around . Enduring moments of discomfort and frustration are not just reserved for the weather ; the ebbs and flows of the sharemarket can have the same impact upon investors . Similarly , in such moments of discomfort , investors can also turn to extreme behaviours , including those which have permanent effects . While it can feel like the unsettling periods are enduring and unlikely to ever improve ( in America the average length of a market crash is 338 days ) , the big lesson throughout the history of investing is that eventually , conditions do improve . In fact , when a bull market follows a market crash it is typically for a longer period than the crash itself ( noting of course that history doesn't repeat , but it does rhyme ) . Therefore , had you resorted to extreme behaviours during a downturn , such as cashing your investments in or moving entirely to fixed term deposits , you likely missed out on the upside once conditions turned . One simple method to overcome the propensity for extreme behaviours is to have a portfolio that is diversified across all the various asset classes , ideally including a mix of assets whose performance characteristics are uncorrelated to each other . That way , whether the sharemarket is moving upwards , sideways , or downwards , the temptation for knee - jerk reactions to be made ( with permanent consequences ) is removed . You can then focus on complaining about the weather and not the sharemarket . BAIOCCHI GRIFFIN PRIVATE WEALTH Level 1 , 462-464 Peel St , Tamworth NSW 2340 6766 9000 AFSL No 424658 This article is general in nature and does not take your individual situation into account . You are advised not to act on anything contained herein , or discussed as a consequence of the contents of this document , without receiving financial advice from a suitably qualified person such as a financial planner , lawyer or accountant . Follow us on Twitter @BaiocchiGriffin facebook.com/Baiocchi GriffinPrivate Wealth Find us on Facebook www.bgprivatewealth.com.au AW7431077