Mark Lister, 28 November 2019

Farming can be a bit like investing at times. Farmers have to grapple with all sort of things that are outside their control. Commodity prices, currency fluctuations and the weather can all influence the success (or failure) of a season or harvest.

Even if a farmer does everything right, one of those things can change quickly and push your entire plan off track. Thankfully, time tends to smooth out the ebbs and flows of these variables, and the long-term is both more predictable and a lot less volatile than the short-term.

Investors have their own set of left-field events that can push their portfolio around unexpectedly. Even the best economists can’t forecast booms and busts with any real accuracy, nor can the most experienced fund managers predict share prices particularly well.

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Even the great Peter Lynch, one of Wall Streets best investors, said that “in this business, if you're good, you're right six times out of ten. You're never going to be right nine times out of ten.”

There is no shortage of challenges facing investors in the current investment climate. None of us have any influence over economic activity, the trajectory of interest rates and share prices, or the political scuffles that are currently dominating headlines.

However, we can control a number of factors that will have a large impact on investment outcomes. With the help of an adviser, we can ensure we have a clear financial plan with sensible and realistic objectives.

We can make sure we stick to that strategy, and that we have a disciplined approach to staying on course. We can ensure we are well diversified, that our asset allocation matches our risk profile, and that we always maintain a long-term investment view.

We can control our investing behavior, how frequently we trade or adjust our portfolios (in this regard, less is often more) and we can work on educating ourselves about investing and financial markets.

Investors and analysts need to keep abreast of economic developments, political matters and other potential threats. However, we also need to accept that uncertainty will always exist, and that many of these risks cannot be predicted or completely removed.

Rather than agonising over them too intently, we are better served by focusing on the things we can influence.

Just like farmers have no power over the weather or global commodity prices, we can’t change the likelihood of a recession, a falling market or an undesirable geopolitical outcome.

What we can do is control how we deal with the consequences of these adverse events and ensure that we minimise the impact they have on our portfolios, as well as ourselves.