If you’re invested in shares, remember how gloomy you were in October? The market was looking terrible as share values tanked.
Investors panicked and hit the “sell” button. And that was a mistake.
The Australian sharemarket rose 4 per cent in November, over 5 per cent in December and now sits at close to record highs. The Santa Rally has delivered a great recovery, not only for individual investors but also for all our superannuation fund returns.
It’s another great lesson in the fact that markets move in cycles. When they’re down don’t panic, if you’re in quality companies the cycle will turn.
Have a look at this table on the performance of sectors on the market over 2021, 2022 and 2023.
What is obvious is that often the previous year’s worst performing sector on the market rebounds the year after. For example, the energy sector was terrible in 2021 and the top performer in 2022; this year it’s back toward the bottom.
Consumer discretionary sector up 24 per cent in 2021, down 20 per cent in 2022 and up 15 per cent this year.
Understanding where you are in the investment cycle is just critical.
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