If the experts cannot agree on when the market has become overvalued, how do you protect yourself from a market correction?

A stock market correction occurs when the market falls 10% from its 52-week high. It is a natural part of the market cycle, and corrections can occur in any asset class. A significant mistake made by investors is losing sight of their long-term goals and strategies and starting to think short-term, selling shares that have provided good returns and holding onto underperforming ones, in the hope that they will recover their losses.

An investment strategy to stop you from holding onto losing shares for too long is to build in a stop-loss order, meaning that you sell any investment once it has depreciated by a predetermined percentage. This strategy takes the emotion out of investing and stops you from attaching too much value to a specific share.

Diversifying your investment portfolio is another way of protecting yourself against losses — keeping the percentage of your total portfolio in shares, cash, property, and bonds constant over your investment term. This strategy calls for a disciplined approach, as it is difficult not to get caught up in the excitement when one of the asset classes goes on a run.

An investor has to realise that markets are cyclical, and that a bear market, defined as a 20% decline from a market high over a period of time, will happen; markets will not keep strengthening forever. Selling when share prices reach the top, and buying when they are at the bottom is an ideal scenario. This is, however, very difficult, if not impossible, to achieve, and the reverse, selling at the bottom and buying when a share price is at its highest, is, unfortunately, usually the norm. Long-term investors therefore usually achieve much better results from their share portfolios than short-term speculators.

In order to ensure that your share portfolio is a winning one, you need to make sure that it includes top-quality shares. Although the best shares in the best sectors may fall the farthest when the market does turn, these shares will usually recover the quickest and be the most valuable in the long run. If you continuously hold the top-performing shares in the top-performing sectors, you will consistently grow the value of your investment portfolio in the long term.

Markets often overreact on both the upside and the downside. Whatever the market reaction though, it is important that individual investors stick to their individual investment strategies. It is understandable that investors are concerned when markets fall and start to question their investments. What an investor does not want to do, however, is to make rash short-term investment decisions that have negative long-term wealth consequences.

Individual investors often make the mistake of allowing the media to influence their decisions about whether it is a good time to buy or sell investments. Investors need to buy or sell shares based on the fundamentals, which means buying or selling a share based on the company’s earnings or profits. It is the fundamentals that will drive the share prices in the long run.

Equities are the most volatile of asset classes in the short-term but have historically been shown to provide better after-tax returns over the longer term. These have also been ahead of inflation, and that’s why investors need to stay the course, even when markets are at their most volatile and most frightening.

The information contained in this article is of a general nature and intended for information purposes only. It is neither to be construed as financial advice nor to be regarded as a definitive analysis of any financial, legal or other issue. Individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult your financial planner/adviser to take into account your particular investment objectives, financial situation and individual needs.

Head further north, and experience spring in the Cederberg in much greater comfort at Bushman’s Kloof Wilderness Reserve. Voted third in the 2016 Conde Nast Traveller Readers’ Choice Awards — Top Resorts in Africa, you can experience luxury in a rocky landscape that, come spring, reveals swathes of colour. See animals endemic to the area, like Cape mountain zebra, bontebok and ostrich, wander through the flowers, and experience guided tours to magnificent San rock art sites.

Driving over mountain passes on the red earth roads of the Cederberg contrasts with the dusty plains of Namaqualand much further north. This semi-arid wilderness is where the real spring flower shows begin. Good rains transform the landscape into a rainbow of Namaqua daisies. The Namaqua region is a biodiversity hotspot, and boasts the richest succulent flora on earth, like vygies (mesembryanthemums) with their colourful luminosity. Namaqualand encompasses wide distances, from the breezy Atlantic Ocean all the way inland to Pofadder, and from the Orange River in the north to Garies in the south, and the Hantam Karoo around Calvinia. To ensure the best self-drive spring flower tour, steer a course around this Northern Cape region, also taking in Springbok, Kamieskroon and Port Nolloth.

Namaqua National Park is situated in a semi-desert area, and has some of the richest bulb flora on earth. Millions of years of adaptation have created unimaginable diversity and one of the most spectacular metamorphoses in the world, where the entire landscape bursts into bloom. Add to this some thousand plant species found only here, the distinctive silhouette of quiver trees, massive granite outcrops and snowfalls of quartz, and you have a landscape like no other. At night, the stars come out, and the lack of light pollution provides a stargazing extravaganza.

Included in the wildflower route is the remote Richtersveld National Park. It is a spellbinding mountain desert with a constantly changing landscape of boulders, dunes, rocky mountain peaks, hazy plateaux and the fast-flowing Orange River. Contrary to appearance, this region, dampened by far-reaching sea mists, has a recorded 300 different plant species in one square kilometre. Many reveal themselves in spring, and demonstrate in part why this has been declared a World Heritage Site. Campsites must be booked in advance, through SANParks.

Seeing flowers blooming across great expanses of the countryside depends, of course, on whether the right amounts of rain and sun have satisfied the thirsty earth and stimulated the sudden growth of some 3 500 different plant species, and whether you happen to be in the right place at the right time. Keeping in contact with local tourist offices is the best way to get your timing right.

The information contained in this article is of a general nature and intended for information purposes only.