Contact Insights – November 2022 – Time in the market, not market timing
Time in the market, not market timing
Contact Asset Management believe that sound fundamental analysis that values high Return on Capital, robust Balance Sheets, sustainable dividend profiles, honest and aligned management teams and appropriate ESG credentials, sharpens our scope to a universe of quality businesses that we can own through the cycle.
Markets are cyclical and investors have been reminded of this truism since March 2020. Yet recent behaviour illustrates that many participants continue to extrapolate the current settings and now-cast into the future. Drawdowns do happen, but they aren’t fatal. That is, if one invests in quality businesses that can withstand challenging macro conditions, and not capitulate to the folly that you can in fact time the market. This is fool’s gold.
We believe that to compound your returns, it is time in the market, not market timing that matters. The S&P/ASX 300 Accumulation Index has delivered a compound annual growth rate of 8.7% over a 20-year period or a cumulative 428% Total Return for the period if the investor maintained continuous, uninterrupted exposure to Australian Equities.