We’ve been doing a lot of reading leading up to and since\u00a0the election – as you’d expect there is no shortage of opinions of what is going to happen to financial markets and how investors should position themselves as a result.<\/p>\n
The investing opinions\u00a0vary as\u00a0extremely as the political views. \u00a0We’ve read crazy things and some very sensible things. \u00a0Perhaps the best articulation of how to approach this was written by Ron Lieber \u00a0in the New York Times<\/a> yesterday when he asked, “Are your goals different now?”<\/p>\n “Once upon a time \u2014 like, say, last week \u2014 you had an investing plan that was based on goals that may come years or decades from now. Perhaps you\u2019re hoping to buy your first home. Maybe you\u2019re trying to save enough to send a couple of children to college. You hope to retire by age 67.<\/p>\n Has any of that changed? If it hasn\u2019t yet, then it\u2019s not clear why your investments should.” \u00a0– Ron Lieber, New York Times<\/p><\/blockquote>\n Big events happen and market volatility sometimes accompanies\u00a0– that doesn’t mean you should try to guess the market’s reaction\u00a0– as Lieber hints, changing your investment strategy to either protect you or try to take advantage of market volatility can be a\u00a0sucker’s game. \u00a0At best you’ll get lucky – at worst you’ll fall victim to many of the psychological pitfalls that leave most investors, both individual and institutional, chasing the market to the detriment of their investment performance. Speculating and investing are very different things. You are an investor and investing successfully is a long term game.<\/p>\n So what should you do?<\/p>\n 1) Ignore the noise<\/strong> – forecasters and pundits are as loud as ever right now. \u00a0As Rob Carrick\u00a0wrote in the Globe and Mail<\/a> yesterday:<\/p>\n “Uncertain times are bullish for market strategists, gurus, pundits and such who want to build a brand by offering clarity about what happens in financial markets….Ignore it all. Do not remake a portfolio that was sensibly diversified using bonds and Canadian, U.S. and international stocks….\u2013 why tilt a portfolio on pure speculation?<\/p>\n<\/blockquote>\n 2) Stick with your plan<\/strong> – your investment plan has been crafted specifically to address your willingness, need and ability to take risk. \u00a0It is aligned with your broader financial plan and designed to deliver what you want from it. \u00a0It’s unlikely the election results change any of these things.<\/p>\n 3) Ride through short-term volatility<\/strong> – \u00a0you should never feel in a hurry to make portfolio changes – sit back and relax. \u00a0Again, investing successfully is a long-term game. \u00a0In the short-term financial markets can be moody and fickle – as Rob Carrick said rather aptly in the same article:<\/p>\n \u00a0“The stock market is a drama king \/ queen”<\/p>\n<\/blockquote>\n 4) Re-balance if necessary<\/strong> – if broad market swings mean your target asset allocation is thrown way out of whack, then make the necessary adjustments to bring it back into balance. \u00a0You may find that in the face of panicked buying and selling, your disciplined re-balancing plan\u00a0naturally gives you opportunities to buy low and sell high.<\/p>\n 5) Observe and reflect<\/strong> – this is volatility – how did you react? \u00a0Are you OK? \u00a0Do you feel like selling all your stocks and buying gold? \u00a0Feel like doubling down on the market every 2% drop? \u00a0 Every time we face volatility is an opportunity not only to lean on your disciplined investment plan but to test your attitude towards risk.<\/p>\n The benefit of having a pre-determined plan is that it shields you from the emotions that are inevitable. \u00a0Everyone has their own political views but you shouldn’t let those views and associated emotions overflow into your sensible investment strategy. \u00a0Ignore the noise. \u00a0Leave the excitement to the day traders. \u00a0Some will be wildly successful. \u00a0Others will fail miserably. \u00a0That’s Vegas. That’s speculating, not investing. \u00a0That’s not you. \u00a0 Stick with your plan.<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" We’ve been doing a lot of reading leading up to and since\u00a0the election – as you’d expect there is no shortage of opinions of what is going to happen to financial markets and how investors should position themselves as a result. The investing opinions\u00a0vary as\u00a0extremely as the political views. \u00a0We’ve read crazy things and some […]<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16,10,7,12,15],"tags":[],"class_list":["post-691","post","type-post","status-publish","format-standard","hentry","category-asset-allocation","category-evidence-based-approach","category-graham-bodel-posts","category-passive-vs-active-investing","category-risk-and-return"],"_links":{"self":[{"href":"https:\/\/chaltenadvisors.ca\/blog\/wp-json\/wp\/v2\/posts\/691","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/chaltenadvisors.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/chaltenadvisors.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/chaltenadvisors.ca\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/chaltenadvisors.ca\/blog\/wp-json\/wp\/v2\/comments?post=691"}],"version-history":[{"count":4,"href":"https:\/\/chaltenadvisors.ca\/blog\/wp-json\/wp\/v2\/posts\/691\/revisions"}],"predecessor-version":[{"id":695,"href":"https:\/\/chaltenadvisors.ca\/blog\/wp-json\/wp\/v2\/posts\/691\/revisions\/695"}],"wp:attachment":[{"href":"https:\/\/chaltenadvisors.ca\/blog\/wp-json\/wp\/v2\/media?parent=691"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/chaltenadvisors.ca\/blog\/wp-json\/wp\/v2\/categories?post=691"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/chaltenadvisors.ca\/blog\/wp-json\/wp\/v2\/tags?post=691"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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