In case you haven’t heard, the markets are down this year, to the point where many investors are spooked and don’t know what to do.
“I am often asked for my view at times like this, and typically my advice is the same: Markets do go down from time to time, but they always recover,” says Jim Grant, owner of Grant Investments of Raymond James Ltd., and licensed Portfolio Manager, representing the Raymond James Private Investment Management Group in the Parksville/Qualicum Beach community.
Market timing rarely works, and typically successful investors do not even try. They accept market corrections as something you need to endure from time to time to succeed over the long term.
“I have learned from experience that investor sentiment is generally a reverse indicator,” says Grant. “Usually when corrections do occur, it is when people are the most negative that things turn around.”
At times like this, the advice you would probably expect from your investment advisor is: ‘it’s a great time to invest.’ This advice is generally good but not always useful. The truth is it depends on the investor.
There are three general categories of investors that Grant most often encounter.
Existing long-term investors
These people are fortunate because they have enjoyed the market benefits of the last few years.
“They have given some back this year and have seen their wealth (on paper) take a hit, but they are doing well in the overall scheme of things,” says Grant. “I personally fall within this group.”
It is still not easy going through a market correction. Even though you’re comfortably ahead of where you were a few years ago, it is hard to shake the feeling that your investments are ‘down.’ It is human nature to dwell on the high-water mark.
“My advice to these people is to stay the course. Unless you are planning to sell your investments today, your account value as of this moment is not that important,” says Grant.
It is also not a good idea to focus excessively on the day-to-day numbers. Market corrections take time, and patience is a virtue.
Peak Time Investors
Then there are those who never really invest much until right around the peak of market conditions, which would have been late last year. This timing almost always leads to buyer’s remorse.
“Many of these people are now saying never again,” says Grant. “I know exactly how these people feel because I was one of them. I first invested right before ‘Black Monday’ in 1987.”
At that time, the Dow Jones Industrial Average dropped from around 2700 to 1700 in one day.
“I was devastated. But I didn’t stop investing, and I am glad I didn’t. The same DOW is over 31,000 today,” says Grant.
On the Sidelines Investors
Then some investors have cash on the sidelines and are looking at what to do with it. Maybe they sold their house or inherited some money, or their business is doing well.
“Many of them are thinking: ‘I’m sure not investing it in the Stock Market, not right now at least,” says Grant. “History has shown us that it is always a good time to invest, especially when markets are down.”
Other, safer investments such as bonds and preferred shares are looking attractive right now. Despite perceived market volatility, there are opportunities.
At Grant Investments of Raymond James, income investing involving dividend-paying stocks, bonds, and other fixed-income investments is an area of specialty. They work with investors in the Parksville/Qualicum Beach community and beyond to ensure their financial goals are met efficiently and consistently.
“Representing the Raymond James Private Investment Management Group in the Parksville/Qualicum Beach community, my team and I offer an excellent wealth management service that can benefit individuals looking for quality retirement planning, estate planning, and wealth management services,” says Grant.
Raymond James Ltd., member – Canadian Investor Protection Fund