Ed Gotham’s Opto Sessions highlights

In a year that has played host to the fastest stock market sell-off in history, a dramatic tech rally and an unprecedented US election, there has been plenty to talk about.

And that is exactly what Ed Gotham, co-host of Opto Sessions, has been doing. He has spoken to some of the biggest and brightest names in investing, and shared their perspectives with the Opto community.

Here, Gotham tells Opto some of the most intriguing conversations he’s had while recording the podcast this year.

Dumping stocks

In episode 16, JC Parets, founder of All Star Charts and technical charting juggernaut, revealed some of the key factors to consider when looking for signals of a market reversal. This was important in March, when equities crashed out in dramatic fashion, but Parets had seen it coming.

“By the time early February came around we were shorting everything in sight, selling everything and buying bonds. It was really a breadth deterioration scenario where we knew we did not want to own stocks. In fact, we were shorting them very aggressively in February well before any crash. Not that I knew there was going to be a crash, I just knew we didn’t want to own stocks. Whether stocks went sideways, down a little or down a lot, but in any of those scenarios we didn’t want to own stocks,” Parets recalled.

"Not that I knew there was going to be a crash, I just knew we didn't want to own stocks." - JC Parets

Listen to the full episode here.

Learning from your mistakes

This year has certainly been a rollercoaster for any investor. However, as mathematician and physicist turned investor and Liberum investment strategist Joachim Klement points out, this should not mean investors have been constantly adjusting their portfolios. In fact, while discussing his latest book, 7 Mistakes Every Investor Makes, Joachim suggests frequently checking your investments should be avoided, especially during extreme volatility.

“The temptation is, I want to take a look at my portfolio and see what it’s done. Obviously, if you do that and it’s down 10% or 20%, the temptation is to sell something … And then what happens is you typically sell at a bad time, simply because you looked at your portfolio constantly,” Klement remarked.

"You typically sell at a bad time, simply because you looked at your portfolio constantly" - Joachim Klement

“You typically reduce risk in these circumstances and people who did that missed out on the recovery that we’ve seen since April. As a result, they’ve compounded their losses by looking at [their portfolio] too often, which has triggered a short-term reaction.”

Listen to the full episode here.

Focusing on the now

In episode 26 of Opto Sessions, Gotham was warned of another common mistake investors make. Speaking to Jack Schwager, renowned author and writer of the industry favourite Market Wizards series, he heard of the risks that come from too much of an emphasis on recent returns and not enough consideration of past performance.

“Most people, if you look at where inflows goes, are usually biggest after you’ve had a long bull run in the markets. If you look at what happens 10 years, 15 years, 20 years forward, the worst performing periods come not surprisingly after you’ve had really good performance. The best performance horizons are when the markets have done really terribly,” Schwager explained.

“If you invest when the markets have been really lousy in the last five years or 10 years relative to history — and I’ve taken these numbers all the way back to the 1850s — you do best by investing for the longer term when the market has done really badly in recent years, which is the opposite to what most people do.”

Listen to the full episode here.

"You do best by investing for the longer term when the market has done really badly in recent years, which is the opposite to what most people do" - Jack Schwager

To hear more from Gotham’s guests, and for many other insightful opinions from a host of expert guests, listen to Opto Sessions wherever you get your podcasts.