If 2008 taught investors anything, it’s this: The market will always climb back regardless of how far it has fallen. Those investors who were able to separate fear and emotion from their decision making during the global financial crisis and stayed invested enjoyed a fantastic rate of return over the past decade1. Those who not only stayed invested but bought good companies on sale set themselves up for an 11-years’ long bull market, and did better still–much better.
These investors didn’t have any secret knowledge. They simply employed logic and likely listened to their investment advisor. Research shows that investors who receive advice build more savings over time, on average 3.9 times more assets after 15 years than similar investors going it alone.2
I say this because everyone knows intellectually that the goal should be to buy low and sell high. It’s obvious. And yet so few do it. I wrote a book, How to profit when investors are scared, to help people understand the influences that can lead to buying high and selling low and the economic data we should be looking at so we can recognize a good time to buy an equity investment.
This is a great time to look at your portfolio, assess whether your investments make sense in today’s environment and rebalance. It’s what I’m doing with my clients.
When the market is at an all-time high, which was the case just a few months ago, it’s difficult to buy top-quality names because they cost too much. Guess what? All those great brands are a lot more affordable today. If you have good stocks and you have an opportunity to trade up, why wouldn’t you? Any possible losses from making that strategic move will be recouped and then some because the premium stocks will do better over time.
This is not the time to sell off investments, particularly good solid investments such as bank stocks, for example, to move to cash. Those bank stocks are poised to come back strong because there is so much stimulus going back into the economy. My best advice: Sit down with your adviser. Reassess your portfolio. Pick up some good quality stocks. And don’t panic.
Call Me or Email Me
My approach to investing is straightforward. I study the markets, global economies and what’s happening within industries to be in a position to best help my clients find good quality investments that will help them meet their goals. I build custom portfolios for each client. I welcome you to call me at 416-332-3863 or email me at allan@allansmall.com.
References
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- What Should You Do About a Falling Stock Market? Nothing, The New York Times
- Modest Investors: Easy Access and the Freedom to Choose are Keys to Successful Long-term Investing, IFIC.ca