Due to an obsession with Taylor Swift and then The Carpenters I decided I needed to have a Carpenters’ CD with the full Burt Bacharach medley they performed in the early 1970s. So I went to Amazon and found that it was only on a Japanese Carpenters’ Anthology CD which would set me back $US150 from the US or $65 for a “very good” second hand edition from Japan. The last time I got a “very good” second hand Elvis book from Amazon it had some pages missing but I decided to give the Japanese CD a go. When I put the order in I was told it would arrive sometime between October 2 to November 4. Immediately I received an email from Japan to say it had shipped then two weeks later it arrived in a huge box. After cutting through all the cardboard and bubble wrap there was a pristine version of The Carpenters Anthology still in its factory wrapping with handwritten note from a Mr Kinoshita from Kyoto in Japan saying amongst other things that a new version had been substituted…I was starting to wonder whether a “very good” second hand version of something from Japan meant it was purchased by someone but never opened. Needless to say I was very impressed and the Burt Bacharach medley was as good as I had hoped.

Anyway investment markets are rarely pristine. In fact the well-known advocate of value investing, Benjamin Graham, coined the term “Mr Market” (in 1949) as a metaphor to explain the share market. Sometimes Mr Market sets sensible share prices based on economic and business developments. At other times he is emotionally unstable, swinging from euphoria to pessimism. But not only is Mr Market highly unstable, he is also highly seductive – sucking investors (and forecasters) in during the good times with dreams of riches and spitting them out during the bad times when all hope seems lost.

So during periods when Mr Market is highly unstable – like the weakness and volatility in investment markets we have seen recently in shares – it is useful for investors to keep in mind a list of critical things that are essential for success in investing in order to avoid being seduced by Mr Market.

Obviously when it comes to investing there is much to debate regarding the key things to bear in mind. And I could add lots of other points as well, but here is a list of the nine considerations I find most useful. I hope it is of value to you too.

Source: Global Financial Data, AMP Capital

About the Author

Dr Shane Oliver, Head of Investment Strategy and Economics and Chief Economist at AMP Capital is responsible for AMP Capital's diversified investment funds. He also provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets.

Important note: While every care has been taken in the preparation of this article, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455) makes no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This article has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this article, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This article is solely for the use of the party to whom it is provided.