Old Mutual Portfolio Manager Peter Brooke says most company stocks are down at the moment which presents a great opportunity for investors to own shares or equities at a discount. He also notes that investing in shares is one of the best ways to protect yourself from inflation.

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By Ntokozo Nkambule

“Falling equity or share prices is good news because they lead to better returns in the long-term” Old Mutual Lead Portfolio Manager, Peter Brooke says.

Brooke, speaking during the Old Mutual Asset Management Thought Leadership Forum, held at the Happy Valley Hotel today noted that investors have a huge opportunity to make great returns. He said company shares have gone down because of the current economic climate, meaning that there has been a great sell-off in the equity markets. “I think people look at this the wrong way. They believe that when shares fall that’s a bad thing, yet it’s not because when prices fall, it’s an incredible opportunity to own shares in great companies. So falling share prices are actually good news. This is particularly good for pension funds, as they can add more to their portfolios” he said.

The Lead Portfolio Manager for Global Macro Equity Strategy at Old Mutual Group further advised on inflation, stating that the best way to protect oneself from inflation is by owning and buying shares. “In the long run, your protection from inflation is equities or shares and the reason for that is that the profits of companies keep on growing, yet money keeps losing its purchasing power. Data actually reveals that when it comes to doubling your money in real terms, equities can achieve that in ten years, yet cash can do the same in eighty-six years, which is why shares or equities are better in protecting yourself against inflation” he observed.

Moreover, Brooke said that the COVID-19 pandemic as well as the Russia-Ukraine war is evidence that most life events cannot be predicted which is why investors and portfolio managers must work hard to diversify their investments. “The various asset classes perform differently and at different times, sometimes bonds are better than equities, and sometimes cash is the best investment, which is why we must always diversify. It’s not always about the biggest returns, sometimes the focus is on protecting your portfolio, so there are times when we must play defense” he explained. He concluded by advising investors to consider the power of compounding. Brooke said compounding is all about starting early in your investment journey.

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