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Sometimes Doing Nothing Can Hurt You
Having been actively discussing investment
portfolios with many individuals recently, some very
common themes keep cropping up. If you are struggling
with what to do in the midst of our current worldwide
stock market correction then rest assured you are
definitely not alone. Let’s explore a few common sense
ways to get your portfolio back on track.
Your Pain is Shared
It is often said that misery loves company.
This is certainly true when it comes to recent stock
market events. If you utilize one of the majority
of financial advisors, or traditional investment or
banking institutions, your portfolio today most
likely has a high concentration of public stocks
and bonds. You are also most likely concentrated
in Canadian stocks or mutual funds. As Canada
is such a resource-based economy, with so much
reliance on the energy sector, your investments
have probably taken the full brunt of the recent
downswing. You are looking for answers but your
advisor repeats the same mantra of “stay the course,
everything will recover, it always does”. You take
solace in conversations with neighbours and friends
that everyone is suffering together. Even though you
may have been through this before, it is certainly
gut-wrenching, and you start asking yourself if there
might be a better way than repeating the same stock
market emotional roller coaster every few years.
Emotions vs. Logic
Human nature dictates that we become
extremely polarized when faced with stressful
situations such as severe stock market downturns.
We might go into a shell, turn off the business news,
ignore the investment statements, and essentially
hide from the markets. Even though logic tells us
that something is simply not right about the way
we are invested, we satisfy the ego, by reminding
ourselves that things will turn out okay if we simply
ignore it and do nothing. On the other hand, we
may capitulate, and give into the pressure. We may
decide to sell everything, keep our investments
in cash, and wait it out. Or we may decide to
completely change our investment strategy, moving
from 100% public investments to 100% private, or
from managed to a Do-It-Yourself approach, or any
Private Wealth Advisor
Raintree Financial Solutions
What to Do After a Stock Market Correction
By David Wiitala