It has been an interesting "ride" over the last few months. The "large cap" chip stocks in both Canada and the US did not hold up well during the closing weeks before Christmas, posting double digit losses in both spaces. But, it is now February 2019 and things are recovering so portfolios look quite different. People often ask me how I "do it"?!?! How do I tolerate the swing in the market? Well, I thought this might be a good time to address it. Volatility can be a blessing or a curse. It is that simple. It just depends on how you react to it. If you constantly "buy" when everyone is buying and then panic and sell when everyone is selling then volatility becomes your curse and the decision making process becomes emotionally biased. So the secret is simple....do not panic. Anticipate volatility and build in "safety" procedures. What are "safety" procedures? Well, here they are:

 

1. Diversify your holdings....different assets perform differently under certain circumstances.

 

and

 

2. Take out emotional bias by "re-balancing" your holdings back to "target" weights...regularly.

 

It is really the re-balancing that is the secret. Just remember that re-balancing does not increase performance but it does statistically reduce volatility. Re-balancing ensures that you take some profits off the table AND it also makes you buy a little more of a position that you may have purchased at a higher price. It smooths out volatility and removes emotional bias. Sometimes we do need to sell things at a loss because there may be significant changes in management's direction for the company OR the stock price is just simply too high verses what the company is earning. I know this and so do you. But in many cases, keeping good companies and just re-balancing those assets back to the target weights of the portfolio ends up being a smarter choice.

 

Anyway, I hope this helps. If you are interested at looking at some investment suggestions, we have added the updated ideas from our Portfolio Advisory Group to the Client Lounge section of my web page. You will need to Login using the password: Enter2019.

 

We are also in the process of adding new Wealth Management articles and booklets designed to help you with Estate Planning, Tax and Financial Planning and for tips for Small Business Owners. So please log in!!!

 

Enjoy your day and please reach out if you have any questions!!!!

 

Barb