KUALA LUMPUR: Taking the long view when investing has never been more important as turbulence continues to hit markets.
The financial markets are roiled by the Russia-Ukraine war, a record inflation that is causing central banks to hike rates and a surge of Covid-19 infections in China following the loosening of its zero-Covid policy.
Investors would, therefore, do well to avoid riskier investments and protect their wealth, said Kenanga Investment Bank head of economic research Wan Suhaimie Saidie.
Citing British economist Benjamin Graham's famous quote, "In the short term, the stock market behaves like a voting machine, but in the long term, it acts as a weighing machine", Wan Suhaimie said in the short run, the market mainly voted based on the popularity of the stock.
However, in the long run, the market should assess the underlying fundamentals of a company.
"Often, the financial market will begin to price in an economic recovery well before it hits bottom as investors look to better days ahead.
"For investors who are worried about a recession, it is advisable to get ahead of the trend by buying assets that do well in the early stages of an economic recovery."
He added that this often included value stocks, small-cap stocks and industry sectors like energy, industrials and financials.
Nonetheless, this is no easy feat for amateurs.
It is best left to investment professionals who pick stocks based on various skills and tools at their disposal to help filter out the noise and find the right investment signals.
The cyclical pattern of the overall economy will somehow end. However, it is crucial to choose safe investments with low risks and are capital guaranteed.
In this regard, unit trust funds like Amanah Saham Bumiputera offer an irrefutable edge — it's safe even during tough times with consistent returns. The fund has always delivered positive returns since its inception.
Global uncertainty aside, Wan Suhaimie said 2023 would be a relatively better year, albeit a challenging one, for Malaysia.
The new unity government is expected to steer the country away from a recession and fortify its resilience.
"This would only be achievable if it's fully committed and pragmatic in its approach to deal with the pressing issues like addressing the plight of the B40 and the discontented M40 due to the rising cost of living, as well as dealing with corruption, rural development, fiscal debt burden, education, food security and youth unemployment.
"At the same time, the government is expected to come up with more investor-friendly policies along with continued support for the small and medium enterprises.
"Although the prospects of a global economic recession are upon us, Malaysia's economy is expected to remain resilient and real gross domestic product is projected to grow between four and 4.5 per cent in 2023," he said.