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As I observe in my latest Financial Post blog, it’s not been the happiest of new years for investors heavily invested in equities. See How to play the market’s ugly start to the New Year: Top up your tax-free savings with ‘Bargains for the Brave.’ It ran on Wednesday.
Coincidentally, earlier that day the Hub ran the latest FWB TV video, on the timely topic of the difficulty of timing the markets, even if you’re a major economist like John Maynard Keynes.
See No one can time the market consistently.
That said, global shares have now been falling for six days as of Thursday and futures looked bleak for US markets, as Shanghai shares fell 7% and Chinese stock trading was suspended in less than a half hour after the market open: the second suspension in a week. European shares were down too. It certainly looks “ugly,” as one hedge fund manager told Reuters.
Watch my Twitter feed over the day for market updates. You can also see my latest tweets off to the right side of the Hub’s main page.
In the meantime, it may time to take a deep breath and put things into a long-term perspective. Here’s what regular Hub contributor Adrian Mastracci has to say on the current volatility.
Reduce effects of market jitters
“Pick battles big enough to matter, small enough to win.”
— Jonathan Kozel, writer and educator.
| Overview: Adrian Mastracci, “fee-only” portfolio manager & financial advisor at KCM Wealth Management says: “Investors spend too much time in the deep end swimming among fears and jitters.” |
Forecasting stock market direction is a predictor’s challenge.
Selloffs and rallies are a constant staple of the investing landscape.
Investors need to reduce the effects of market jitters on the cherished portfolio.
Turn recurring worries into opportunities.
I stopped fretting about news headlines long ago.
My focus is on the fundamentals of investing.
I don’t pin my hopes on guessing whether the markets deliver or disappoint.
Instead, I work on strategies that deliver over the long run.
Here are four investing battles you can win.
Let’s connect the dots:
1.) Mix
Design your appropriate mix of assets and invest within it.
Stocks can deliver, but don’t forget those terribly boring bonds.
Buy some picks on the way down; sell some on the way up.
2.) Quality
Pay close attention to the quality of your investments.
If you crave a little aggressiveness, set aside a defined amount for such picks.
However, do keep a keen eye on your losing positions.
3.) Diversity
Sprinkle your nest egg among investments located around the world.
Your biggest portion is likely invested at home.
Diversification is not foolproof, but it’s effective medicine.
4.) Emotions
Take a pass on making those emotional decisions.
Think logically and skip the attachments to your investments.
Most investors miss the exits when it’s time to cash in and move on.
Your goal of investing is to be right more often than wrong.
Yes, assume that parts of your investing journey will incur some losses.
Keep looking for ways to reduce dreaded jitters and turn them into opportunity.
There are always more investing battles heading your way.
Adrian Mastracci, MBA, is president and portfolio manager for Vancouver-based KCM Wealth Management Inc., specializing in designing and stewarding retirement portfolios.
