Tag Archives: risk

Stock market investment advice for worry-warts

patmckeough
Patrick McKeough, TSINetwork.ca

 By Patrick McKeough, TSI Network.ca

Special to the Financial Independence Hub

Many investors spend a lot of time worrying about the wrong things. In particular, they worry about things that are unpredictable. Even if they happen, these things may have only an indirect impact on their long-term profits. As a result, they have little time to pay attention to things that have a direct impact on the value of their investments. Our stock market investment advice will help you become a worry-free investor.

For instance, at times they may mull over every tidbit of economic information that comes out, and how it differs from its predecessor of a week or a month earlier. They hope to detect a pattern—a sign that the economy is mending and headed for a return to steady growth, say, or perhaps deteriorating and doomed to plunge into a new recession.

Others look for patterns or omens in domestic or international politics, or in demographic data, or in the price of gold. This can eat up an awful lot of time and no stock market investment advice out there can save you the time you’ll waste.

These investors often feel they can cut their investment risk by selling some or all of their stocks in times of high risk, and buying them back when risk is low. This never works well for long. After all, risk as portrayed in the media, and genuine market risk, are two different things. No matter how you try, it’s hard to pinpoint market turning points, if only because you have to outguess so many other smart people who are trying to do the same thing.

Why stocks imitate the traffic on freeways, not elevators’

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David Trahair’s contrarian stance: Be a loaner, not an owner

125_Enough_Bull_High_Res_Cover_FinalBy Jonathan Chevreau

Financial Independence Hub

In this summer’s series on the 7 eternal truths of personal finance, one of the articles was entitled Be an Owner, Not a Loaner, which reflects the usual financial industry advice that stocks are more likely to generate long-term investment returns than cash or bonds.

There is of course a contrary view to this eternal truth and it’s best contained in the new second edition of David Trahair’s book, Enough Bull, originally published early in 2009, right at the bottom of the financial crisis..

Trahair, a chartered accountant and author, could as easily have titled his book Be a Loaner, Not an Owner, because he’s adamant that stocks (i.e. equities), whether individual or pooled through mutual funds or ETFs, are just too risky for the average person.

The book cover includes a small image of a bull (as in a steer), so clearly the title Enough Bull is a double entendre: as in no more bullish prognostications on the stock market, as well as no more bovine excrement, whether dispensed by the animals or financial advisors.

Skeptical about the financial industry and its central belief in stocks Continue Reading…

How to cope with stormy markets

Depositphotos_1819942_s-2015By Adrian Mastracci

KCM Wealth Management

Special to the Financial Independence Hub

The top question directed my way these days is: “What do I do in these markets?”

Investors constantly fret about surviving stormy markets, like the present.
Rising some days then slipping on others.

For example, the Dow trimmed over 12% from its 52-week high.
Similarly, the TSX has fallen more than 14%.

Financial history repeats itself all too frequently.
Price swings of this size should be expected as normal by every investor.

The absence of global growth is felt in all markets.

Some questions

Many questions arise, such as: Continue Reading…

Stress test your nest egg

Adrian
Adrian Mastracci

By Adrian Mastracci, KCM Wealth Management

Special to the Financial Independence Hub

Financial stress testing is an indication of how portfolios fare during tough times.

Some US banks have had difficulty passing their stress tests.

Many a portfolio can also benefit from a form of stress testing. Investors often make high demands on the nest egg.

Our tests may reveal cracks in your financial foundations. The analysis is straightforward with “Yes/No” answers.

We survey all new inquiring clients.
“Will your nest egg pass our battery of simple tests?”

Test on 6 issues

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Three key investment strategies hidden in plain sight; #2 — Manage Market Risks

paul_2-1500x994
Paul Philip CLU, CFP

By Paul Philip CLU, CFP, Financial Wealth Builders Securities.

Special to the Financial Independence Hub

In our last piece, we described why most investors should ignore the never-ending onslaught of unpredictable financial news and tend to three strategies that can be much more readily managed – at least once you know they are there. Hidden in plain sight, these potent strategies include:

  1. Being there
  2. Managing for market risks
  3. Controlling costs

Plain-Sight Strategy #2: Managing for Market Risks

Don’t take on more risk than you must.

Chalkboard drawing - Measure of Risk and Reward

There’s no getting around the fact the market does not deliver rewarding returns without periodically punishing us with realized risks. That’s why it’s so challenging for most investors to “be there,” consistently capturing available returns by remaining invested over time. It’s also why it’s vital to avoid taking on more risk than you must in pursuit of your personal goals. For this, we have two powerful tools at our disposal, best used in tandem: Continue Reading…