Quick bite: Are investors getting braver?

Volatility doesn't seem to be scaring off Kiwi investors—could it be teaching us new strategies?

In this bonus clip, Susannah Batley from Sharesies & Paul McBeth (The Bottom Line) discuss how investors are adapting to market turbulence by shifting toward ETFs and diversified funds rather than retreating. Does traditional index investing still provide true diversification when a handful of tech giants dominate returns? Could we be seeing a psychological shift with today's retail investors seeing market fluctuations as simply "the price of investing."

This clip is taken from our previous episode 'The art of strategic mediocrity' For more or to watch on YouTube—check out http://linktr.ee/sharedlunch

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Investing involves risk. This episode is brought to you by Sharesies Limited (NZ) in New Zealand.

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Episode Transcript

Speaker 1 (00:00):
You're listening to a Sheerseise podcast. I've been really hardened
to see the response to this period of volatility, where
the latest figures from the Cheess's Index over the quarter
January to March showed again continuing strong netbuying through this period,
and then also a shift away from sort of more
individual companies and into more ETFs and diversified funds as

(00:25):
well as into defensive individual companies as well. And I
do think that reflects the fact that we are probably
in for a period of continued volatility, and diversification is
a really sort of important thing to make your portfolio
more resilient to sort of withstand with send that period.
I also think actually even before this tariff war and

(00:49):
these geopolitical events that we're seeing play out, you know,
if I look at twenty twenty four, in the year,
the S and P five hundred was up, I think
about twenty five percent, but about half of those companies
had losses so had a negative return for that period.
And actually it's a very few number of companies that
accounted for the majority of that return. And I think

(01:11):
that is a trend that we're seeing more and more,
particularly as you have large tech players with high operating leverage,
and you're seeing some more global companies and unless you
can you know, really pick who those winners will be,
it's got to be hard to even beat the market
return if you haven't got decent exposure to those very
few sort of fewer and fewer stocks that are driving

(01:32):
the big outcomes. And so I do think that moving
more to that diversified approach is really helpful as we're
seeing that trend even beyond you know, the volatility we're
seeing off the back of the Trump saga.

Speaker 2 (01:46):
It's hard to look at say like QQQ, the Nasdaq
ET or the S and P five hundred and really
consider either of those to be diversified, given the concentration
of Magnificent seven and you know, just thinking about like
you know, people on shares this platform, this is key
we investors being drawn more to US stocks and they're

(02:06):
going down this. You get told to diversify your portfolio.
This American market should be one that you should go into.
But if you're only going into seven companies that are
making up the dominance of it, it's hard to wrap
your head around how you're actually diversifying your investment there,
or if you're just trying to ride the wave that
we've all been doing for what last seven eight nine
years now.

Speaker 1 (02:24):
I remember a time on the ins oft X fifty
where I think it was fishing, Facal, Healthcare, and A
two milk collectively we're something like thirty percent of the index,
and so unless you had for fund managers that didn't
have a massive exposure to those two, they almost always
underperformed index at that time. What we are also seeing
because we call a lot of our KEYSAB members and

(02:46):
we are are tornture investors all the time. And another
thing we're seeing is we're actually finalarging investors, not disengaged.
They're not going I just put my head on the
set end and try and just forget about this period.
We are seeing investors actually continue to check in with
their balances, but also they're saying, actually, this is just
part and parcel of being an investor. And I think

(03:07):
that really is a shift in mentality of what we've
seen in previous periods, particularly amongst retail I'm talking to investors,
I've seen a really big shift in psychology where where
it is much more volatility is the price of investing,
and it's not a penalty. It's not for doing something wrong,
it's literally the price of being in the market. And actually,

(03:27):
when I do talk to investors, the things that they're
worried about is not volatility in the short term and
they shouldn't be like for investors taking a long enough
time horizon and advertiate. Volatility in in itself shouldn't be
the issue. The issue is, you know, can I lose
some all of my money or am I going to
get inadequate returns for the risk I'm taking on. Those
are the issues that investors need to be concerned with,

(03:49):
not that short term volatility. Investing involves the risk you
might lose the money you start with. We recommend talking
to a licensed financial advisor. We also recommend breading products
displosure documents before deciding to invest.