Hello Everyone,

As we begin a new year, many of us tend to make commitments to improve ourselves through new year resolutions with the intention of changing our habits or behaviour. This year, I'd like to suggest that you consider making a resolution for your investing behaviour.

There were some nice gains in last year's market and to continue having investing success, you need to avoid impulsive behaviour. Reacting impulsively to market ups and downs is a key reason for poor investing results. This is why I use behavioural coaching to help keep my clients stay on track with their investment plans.

When markets go through prolonged sell-offs (a.k.a. Bear Markets), your natural reaction is to sell your investments to prevent further loss. But this is the wrong thing to do because you will invariably miss out on the market rebound that often surprises investors by its suddenness. Of the 11 market drops since 1950, seven recovered all their losses in one year! If you sold at the bottom of the bear market in early 2009, you would have missed more than half of the rebound if you didn’t get back in within two years.

So, what’s the right thing to do? The answer is: “NOTHING”. Evidence Based Investing tells us to stay invested because the markets have always bounced back and reached new highs. This has happened throughout the history of the stock market. The best thing to do is to have a plan, stick with it and ignore the turbulence. 

To read more about Behavioural Investing,  click here to read our article series titled “The Behaviour Gap”. These articles describe how investors always fare worse than the market indexes because they sell at the wrong times.

This month’s focus is on Optimizing Investments from our Successful Retirement Solution. The first article emphasizes the tenant of Evidence Based Investing and the second article explains why we need to be wary of 'experts' offering market predictions. The last article has some of the latest findings about dementia and what you can do to prevent it. Hopefully, these articles will help you achieve a successful 2020 and beyond.

 

                                     LIVING IN FAITH

Chad