In a world where people can be bombarded with information, AMP Capital Head of Investment Strategy and Chief Economist Shane Oliver recommends taking a strategic approach to investing.
"If you are to be a successful investor you have to have an investment process," says Oliver.
The trick, he says, is cutting out the noise and sticking to the fundamentals.
- AMP Capital's approach is to look at five key indicators:
- Valuations – whether they are expensive or cheap
- Where that asset class is in the cycle
- The liquidity backdrop, specifically what the central banks are doing
- Sentiment. "If everyone in the class is bullish that worries me a little bit," notes Oliver. "That means there may only be one way for the asset to go and that’s down."
- Chart points or technical analysis. "It's useful to have several sources of quality research but you need to have a process to filter that information," Oliver says.