A crisis to rediscover the meaning of investing

The financial markets are in the midst of a storm and Italian savers are rightly concerned. However, the feeling is that there is a hypersensitivity to market movements, a phenomenon that has grown in recent years. To date, the descent of Wall Street (S&P 500 index) is part of an all in all physiological dynamic, the deep declines of the Covid crisis or even more so post-Lehman crack have not yet been reached.

The situation is certainly complex: the market is experiencing a shock that stems from politics (Trump's decisions on tariffs) and this is affecting finance. The constant back-and-forth on tariffs creates uncertainty and could last for some time. But complicating all this is the fact that the stock market had in the last two and a half years returned from a considerable rise (only partly eroded) and this has put off in the minds of investors the possibility of a violent descent. In recent years, many investors have also approached the markets in the wake of Bitcoin's strong rises: the belief that one can make easy gains in a short time has become more and more entrenched, and this has made many lose the sense of investing. This is precisely the point that is generating the hypersensitivity of many savers to market fluctuations: investing does not mean trading, but setting up medium- and long-term strategies that are also capable of absorbing the violent movements that are part of market history and are unpredictable.

In short, there is a need to return to the fundamentals. Recover the sense of investing and leave trading to those who know how to do it and have time to devote to it. The best way to manage emotionalism in the markets is through the Pac, the accumulation plan. That is, to periodically buy instruments that invest in equities so that violent market movements are absorbed and spread out. No Pac can guarantee a profit a priori, but statistically a time horizon of more than 10 years is a harbinger of returns. Waiting 10 years today seems almost a heresy for those who are looking for a hit and run, but that is the investment. Alternatively, to take advantage of even shorter horizons, one can create a well-diversified portfolio along the lines of the so-called 'permanent portfolio' created over 30 years in the US. A portfolio with cash, global bonds, global equities and gold, rebalancing the same every year: the basic principle is that investments must go somewhere with gains that compensate for losses.Such a portfolio in recent weeks would have contained the decline thanks to gold, for example.