Investors think like farmers

CRISIS: FOUR SEASONS OF THE MARKETS RESEMBLE THOSE IN NATURE - MOVING IN CYCLES

- Jaco Prinsloo

• You don't plant in winter or harvest in spring but you harvest in autumn.

In 2008, South Africans watched as the global financial crisis unfolded, shaking markets, businesses and entire economies. For many, it felt like the end of prosperity. Property values dropped, businesses struggled and people feared for their financial future. Yet, just a few years later, those who stayed patient and invested wisely saw remarkable recoveries.

If you have ever driven through the farmlands of the Free State or the vineyards of Stellenbosch, you will notice something: farmers do not panic when winter comes. They do not abandon their fields. They prepare, knowing that spring will return. The best investors do the same.

Financial spring:Opportunity in the dirt

Financial spring is when things look the worst - when pessimism peaks, fear is rampant and everyone assumes the game is over. But under the surface, something is happening. The seeds of the next boom are being planted.

March 2009 was a perfect example. The world was still reeling from the financial crisis. Stocks had been crushed. The media was filled with stories about the “death of equities”. But the best investors — those who understood cycles — were quietly buying. Not because they knew the market would bounce back immediately, but because they understood that winter never lasts forever.

Signs of financial spring:

• Pessimism is everywhere, which means opportunity is too;