Should you be going on the defensive?
Why going defensive may not be the best idea.
When markets don't seem to be validating your long-term investment strategy, the temptation to change course is understandable.
You can see this in the way, since the financial crisis, bond investors have entered the stock market in search of bond-like stocks, which has now led to a situation where defensives are perceived by some as overvalued. As contrarian investors, Orbis Investments has chosen to avoid these stocks.
Staying true to this contrarian approach does, however, lead to periods of challenged performance, which can be concerning for investors. So, in this piece, Orbis Investments explains why it can be better to focus on the long term.
If you read this, you will learn:
- why certain investors have flocked to defensives
- the magnitude of recovery after challenging periods in investing
- why it's sometimes valuable to stick with investments that seem to detract from performance.