Did you see the video that went viral recently, where surfer Mick Fanning ‘fought off’ a great white shark in the final of the world championships?

Shark encounters like this are rare, and usually a case of mistaken identity – they mistake surfers, snorkellers or swimmers for seals, and come closer (or take a nibble) to investigate.

I was interested to learn that shark spotters along the Cape Peninsula use a flag system to alert people in the ocean.

  • A white shark outline on a green flag means shark-spotting conditions are good and no shark has been seen
  • A white shark outline on a black flag means no shark has been seen but shark-spotting conditions are poor
  • A white shark on a red flag means high alert because the risks are high or a shark has been seen within the past couple of hours
  • A black shark on a white flag means a shark has been spotted and people should leave the water immediately

Investment may not be quite as dangerous as swimming with sharks, but if you ignore the warning signs, you could be on dangerous ground.

Here are our top 20 DOs and DON’Ts to be aware of:

  1. DON’T expect instant results; DO take a long-term view
  2. DON’T stick to only a few stocks, sectors or countries; DO go for diversification
  3. DON’T build your portfolio around dimensions that are rare, intermittent or weak; DO choose dimensions that are pervasive, persistent and robust
  4. DON’T believe an investment that is promoted as ‘no cost to you’; DO realise you are still paying for it somehow DON’T buy products that are marketed as ‘smart’; DO be aware that’s meaningless marketing speak
  5. DON’T be misled by the words ‘proprietary’, ‘private’ or ‘non-traded’; DO understand that means high-fee and illiquid
  6. DON’T be talked out of investing in low-cost index funds; DO consider who benefits most from low costs
  7. DON’T ignore fees and expenses; DO keep costs low
  8. DON’T rashly buy investments you can’t get out of for weeks, months or years; DO consider them carefully
  9. DON’T time the market year by year; DO capture returns whenever and wherever they appear
  10. DON’T try to second-guess the market; DO let it work for you instead
  11. DON’T be swayed by speculation in the media; DO realise that media stories are usually only valid short-term
  12. DON’T act on headlines that give a distorted view; DO keep up with the news and look beyond the headlines
  13. DON’T let emotions such as greed and fear dictate your decisions; DO remain realistic
  14. DON’T make any investments that you don’t completely understand; DO ensure you get clear answers to all your questions
  15. DON’T invest in anything if you are unclear about the costs; DO include the costs in your budget and forecasts
  16. DON’T invest in anything if you’re not aware of the risks; DO make sure your investments matches your personal risk profile
  17. DON’T assume that a complex strategy is always better; DO consider that a simple strategy could save cost
  18. DON’T immediately buy investments from someone who receives a commission; DO get an objective second opinion first
  19. DON’T imagine you can control the markets; DO consult with an adviser who’s acting in your interest, and create a low-cost diversified portfolio that matches your needs and risk tolerance

We hope you find these tips useful, so you don’t get bitten.

Tucana Insights

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