A list to pin on the fridge

Volatility can be a great opportunity if you understand how to beat the herd

- Marcus Padley

For the Marcus Today team and the growth portfolio we manage for investors ($55 million), Covid-19 was not a disaster. The sharemarket volatility proved to be a fabulous opportunity instead. Our Growth Separately Managed Account (as at June 10) has outperformed the ASX 300 Accumulation Index by 26.87% since the coronavirus hit on February 20.

And when the market falls over again we will see another fabulous opportunity beginning. But how did we do it? At the risk of letting out our secret herbs and spices, here are 18 ways to beat the herd. These lessons are not for everyone, and most fund managers are too big to do this, but it is something to pin on the fridge.

• Have the ability and bravery to go to 100% cash. Most fund managers can’t, but as an individual investor you can.

• Work with a small team, not alone. You need bouncing boards, other intelligent, engaged people on an assortment of wavelengths. People who are objective, are not easily intimidated and speak freely. Working alone means more mistakes. Too big an investment team constipates the investment process. You need something in the middle.

• Be unemotional. It takes a lot of experience to be truly objective. If you ever “love” or “hate” a stock, you’re missing the point. You can’t invest on feelings.