Don’t be so quick to trust the mainstream narrative or ‘experts’

March 1, 2017

One thing that the events of 2016 have clearly highlighted is that the so-called experts pushing the mainstream narrative are not always right.

The election of Donald Trump as President of the United States, after being written off and dismissed by just about everyone, has proved this once and for all. The experts can be, and often are, very wrong.

There is an endless stream of commentators who continually forecast things that don’t end up happening, but they miss the things that do. Investors are warned almost daily to prepare for the worst due to the prospect of rising interest rates, a slowdown in China, the decline of the coal sector, the death of retail shopping due to the internet…. the list goes on and on. As an example, when oil got to $30 per barrel the experts said it would drop to $10. A few years ago when it got well over $100 per barrel, they said it would go to $200.

Just because it is the mainstream narrative, it doesn’t mean it is true. Investors are constantly told to get used to below-par returns, which the experts say are now the norm, and to make sure their portfolio is fully diversified to weather the impact of all the bad news they are so sure is just on the horizon.

As Sentinel investors have heard me say many times over, the call for asset diversification is the laziest excuse around for justifying investment under-performance. It doesn’t matter if you invest all your funds in property, shares or bonds, if they are bad investments they are bad investments! Those who tell you to ‘diversify’ are only focused on minimising your losses and not on maximising your returns.