Index to keep tabs on market trends

South Africa's inaugural investor confidence index, launched yesterday by Sanlam Investment Management, takes a leaf out of Warren Buffet's book by aiming to display market trends that could help keep emotions from corroding good investment decisions in the future.

South Africa's inaugural investor confidence index, launched yesterday by Sanlam Investment Management, takes a leaf out of Warren Buffet's book by aiming to display market trends that could help keep emotions from corroding good investment decisions in the future.

"The information offers insight into the mood among investors and indicates how significantly major market changes affect investment decisions," said Sanlam Investment Management managing director Armien Tyer yesterday.

Chairman of the Institute of Behavioural Finance Theo Vorster said the area of human emotions needed to be understood.

"The key is to read these trends to avoid the mistakes. It entails having rigid principles, which is not so easy," said Vorster.

The Sanlam Investment Management Investor Confidence Index is the only national barometer of investor confidence and is one of only three in the world.

It is based on the Yale School of Management Stock Market Confidence Index conducted in the US and Japan. "The advantage of the instrument is that it allows comparisons with similar American data that has been collected since 1984, as well as Japanese data that has been collected during the last decade," said Vorster.

South Africa's inaugural investor confidence index shows that investors still exude confidence, with 85percent of respondents expecting positive returns from the market over the next 12 months despite the recent turbulence. - I-Net Bridge

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