I have to admit that I now tend to review my investments on a monthly basis, having learnt the hard way that annual reviews can cost the earth. In April 1999 I decided, for the first time, to buy a stocks-and-shares Isa (rather than a cash one). I gave my £3,000 annual allowance to a reputable firm as a long-term investment in FTSE 100 shares for my daughter's higher education. Conventional wisdom was, and still is, that a five-year time horizon should be the minimum. April 2004 and, although the index had bounced from 2003's nadir, after commissions and fees my money had shrunk by half. Deciding that the likelihood of making it back over the next five years was minimal, I cut and ran. Lesson learnt: the time horizon is for the broker's benefit and means: 'a captive punter pays me for five years, no questions asked.'
Another thing to look out for: tall tales. Stories about how 'this time it's different'; about a new and exciting venture; how a frontier market has been overlooked but your canny adviser spotted it. Usually it involves a company in which to buy shares, although it might be a country's prospects. Today it's Argentina - the brand new frontier that speaks European, is white, and is now a sure winner. Yes, pariah turned cool kid with a blue-eyed business-friendly president with Boca Juniors street cred makes a good story. Looking at the chart of the Argentine peso, currency devaluation is a key to his economic policy. How does that grab you?
Euphoria is not only contagious, but can be very dangerous too: the sort of punt the chattering classes say you really must own. This of course only happens when things are on the way up and is often linked to alternative investments. Levitation becomes sky high, it's reported breathlessly as front-page news, and the excitement is palpable. And then for some reason the merry-go-round stops so suddenly that most do not even realise it. Charting prices you'll see that something called an 'island reversal' often forms, with gaps both on the way up and on the way down marking an extreme apex. Rushing to the exits is by then probably too late.
Also take care with consensus thinking, something fresh in the minds of those in Britain where all and sundry warned that voting to leave the European Union would be disastrous. Stock market collapse, economic meltdown, sterling a basket case. Yes cable collapsed on 24 June, but there has been no follow-through 100 days later. A market needs two-way thinking otherwise it's all done and dusted, entrenched positions going nowhere. As General Patton said: "If everyone is thinking alike, then somebody isn't thinking."
