Investors on MSCI World and Tech stocks should heed Pope Francis' warning and take immediate action, according to ETF-Papst Gerd.
Investing Strategies in Turbulent Times: Insights from Gerd Kommer
Navigating the markets can be a challenge, but Gerd Kommer, a seasoned asset manager, advises taking it slow. In a recent interview, he discussed the current investment landscape, emphasizing why diversification and a long-term perspective are essential. Here's a breakdown of his advice, mixed with a dash of extra insights to help guide your investment choices.
After a wave of turbulence in the market, Kommer believes we're still not quite at the bargain stage. He points out that tech and US stocks, including companies like NVIDIA, are still overvalued despite the correction. Rather than focusing on specific countries or sectors, Kommer suggests a more diversified approach. "It's risky to focus on just one sector or country," he warns, recalling past mistakes such as the 80s' Japan boom.
One of Kommer's cornerstone strategies is a long-term investment horizon. In times of crisis, it's easy to get caught up in the day-to-day, but he encourages investors to take a step back and consider the big picture. Over time, an MSCI World ETF has averaged around 8% returns per year, even during periods of correction.
Popular investment sayings like 'Don't bet against America' and the belief in eternal tech superiority should be taken with a grain of salt, according to Kommer. The past 43 years have shown that other sectors like Health Care have also performed well.[1][2] He impresses upon investors to avoid being blinded by trends and to instead focus on structure, patience, and broad diversification.
Kommer also advises being less reliant on the US market by adjusting the ratio of US stocks in one's portfolio. For instance, his own portfolio contains around 30-40% US stocks compared to the about 70% in the MSCI World ETF.[2]
Automated, systematic investing and regularly saving money are essential to minimize behavioral biases, as referred to as the "world portfolio concept." This disciplined approach helps avoid market-timing errors, even during intense geopolitical or economic shocks like the 2025 market downturn.[4][5]
A structured strategy like Kommer's aims to provide a more resilient core equity holding during uncertain times compared to traditional market-cap indices.[1][5] By following his advice and integrating global diversification, a scientific, rules-based approach, and a long-term perspective, investors can be better prepared for the volatile market's twists and turns.
[1] Adapted from L&G Gerd Kommer Multifactor Equity UCITS ETF Investor Guide[2] Adapted from Gerd Kommer's Interview on Finanztest.de[3] Ströer, J. (2022, March 25). Warum ich jetzt an US-Aktien investiere – und warum ich mich bei ETFs bleibe. Handelsblatt. Retrieved from https://www.handelsblatt.com/finanzen/insider/marktpulse/warum-ich-jetzt-an-us-aktien-investiere-und-warum-ich-mich-bei-etfs-bleibe/26945402.html[4] Adapted from Gerd Kommer's Analysis: Zollkrieg-Crash – Wie ein globaler Auseinandersetzungskrieg das Stockmarkt kracht[5] Adapted from L&G Gerd Kommer's Webpage on the MSCI World Index
- Gerd Kommer advises a diversified investment strategy, warning against focusing solely on one sector or country, citing past setbacks such as the 80s' Japan boom.
- Kommer emphasizes the importance of a long-term investment horizon, pointing to the consistent returns of MSCI World ETF over decades, even during downturns.
- To prepare for market volatility, Kommer suggests investors minimize behavioral biases by adopting automated, systematic investing and regularly saving money.
- By following Kommer's structured strategy, which includes global diversification, a scientific, rules-based approach, and a long-term perspective, personal finance and investing can become more resilient amid turbulent times.
