Glad you didn't sell it all?
Quinn Waddington - Mar 22, 2019
This is a follow up to my post Is it time to sell it all? which I published in December, about a week before the bottom of the most recent sell-off, so go read that before you read on.
We saw a very drastic sell-off in the last quarter of 2018 with the markets dropping dramatically in October and then again in December. Before those drops, most global markets had been slightly positive in 2018 but the sell-off led to almost all ending the year negative, with most, including Canada, down over 10%.
Since Christmas Eve, the markets have reversed the negative course they were on and have basically moved upwards in a straight line. This article isn’t meant to be an “I told you so” because in the same way no one predicted the dramatic sell-off to end 2018, no one, including myself, predicted the markets would bounce back so quickly.
My previous post did however, discuss the history of market corrections and how panic selling is one of the most common ways investors lose money in the market. I emphasized the idea of Doing Nothing. I understand, this is difficult to do when you are looking at your portfolio value dropping every day, but removing the emotion is paramount to investment success.
One other note that I didn’t mention was the stories I have heard of people who sold during the 2008 market crash and never got back in. In these cases, the fear caused them to sell everything when things were bad, and that same fear stopped them from re-investing as the markets began to recover. HERE is a chart that shows the long-term market returns and is a good reminder for the next time we get a correction.
The biggest point I wanted to make with both articles is the importance of having a Financial Plan. Your Financial Plan can change with your needs and objectives but having something you can refer to when making long-term decisions will help remove the emotion. You won’t be as worried about what happens day-to-day, week-to-week or month-to-month because all that matters is that you are still on track to meet your goals.
As always, if you feel like your finances are being neglected, you would like a Plan or just want a general chat to see if I can help, please don’t hesitate to connect with me.
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