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Stay Invested…PLEASE!!!
Posted on October 14, 2008 at 7:29 pm
Filed Under Financial Markets, Financial Planning, Investment Planning
Volatility seems to be a very popular word lately, and with good reason!
Over the course of last week, we saw the Canadian market fall a whopping 16% in only five business days. Those are numbers we haven’t seen for years. Amazingly however, both the Canadian and American markets bounced back quite strong to start off their trading week. The Dow Jones was up over 11% yesterday and the S&P TSX rebounded today by almost 10%. Those are both very substantial one day numbers and present a great learning opportunity for all of us.
Your Take-Away: There is no one, including myself, who enjoys watching their investment portfolio diminish as we’ve all seen over the course of the last few weeks. It becomes very easy to consider selling your investments and moving everything to cash, but after yesterday and today, it becomes very evident that usually that is not the best decision.
Don’t get me wrong, I’m not here to predict whether this is “capitulation”, a “dead cat bounce”, or even the “bottom” for that matter. I am here to say however that if you lost 16% last week and pulled ouf of the market on Friday, you would have missed a 10% or 11% turn around and still been sitting at your “personal market” low. In other words, you would not have been in the market long enough and thus recovered a good portion of your losses.
Riding the wave is not easy, but if you do have a mid to longer term time horizon, it usually works out to be your best bet in the long run. Staying invested and waiting this out will most likely help you to recoup your losses and exceed your highs over time!
Until next time, happy investing…and waiting!
Chris
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