How should investors deal with mass uncertainty in global financial markets?
Globe and Mail personal finance and investing writer Rob Carrick took your questions in a live chat.
The Globe and Mail - Thanks for joining us today, readers. Rob Carrick will be online in a moment to start taking your investing questions. You can start sending them in now.
[Comment From Guest ]
Hi Rob, what do you think of IPATH SP 500 VIX SHORT TERM FUT ETN to take advantage of the increased volatility in the markets?
Rob Carrick - I've been meaning to put this ETF under the microscope, but haven't had the chance. But I caution investors about it, and all other ETFs or other investing products they believe will give them profits in down markets. Not saying these things don't work, but you have to be VERY savvy in handling them. They need daily attention, and you have to understand how they work. If not, avoid.
[Comment From William ]
Hi Rob, Thank you for your time. In an earlier comment by you, you state do not change strategies during this latest downturn. How about if you have cash currently on the sidelines. Jump in or wait it out? If jump in is the option, then, into what?
Rob Carrick - Hey, William. Neither. Don't jump in, and don't wait it out. Rather, take a few measured steps into the market. Buy some, wait, buy some more. Do it monthly or quarterly. Not saying this is the MBA-smartest way to go, but it will give you some comfort. Cuts the risk of putting money into the market and then watching stocks plunge. What to buy? In a word, quality. Could be mutual funds, ETFs or stocks.
[Comment From Adam ]
Hi Rob, would you buy gold , e.g. a bullion fund ? even at today's high prices? At what price would you NOT buy?
Rob Carrick - Adam, glad you mentioned gold. Lots of investors think it's the one thing that will bail out their portfolios in rough times like these. If gold were such a slam-dunk, though, why aren't all the pension funds buying it? Why aren't all the hedge funds buying it? Why isn't the price of gold rocketing higher (I know, it is moving somewhat higher)? The reason is that gold isn't a one-way investment. It can fall in price, too, and it just might if the global economic situation stabilizes. Buy gold today? I'm skeptical, unless you're exceptionally bearish about the future.
[Comment From Juan C ]
Hello. Is seling a property (apartment) now in anticipation of a real state downturn a good move?
Rob Carrick - Hi Juan. Um, yup. Without commenting on how appropriate selling a property is for you, personally, I'd say now's an opportune time to lock in profits you made on a property. When/if prices fall a whole bunch, that's the time to buy back in.
[Comment From nb ]
Canadian bonds? Small green-energy start-ups?
Rob Carrick - Sigh. Why do investors always get goofy about bonds when the stock markets are falling? Own bonds always. That's a good rule for most investors. Buying now is tricky, though. As stocks have plunged, so have bonds soared. So you'll be buying high if you get into bonds right now. The place to invest is the stock market, if you can hack it.
[Comment From Guest ]
I'm planning on retiring in 7 years. I was thinking of moving some XEG (Energy) and CBQ (BRIC) into CDZ (Cnd Dividends). Is that a good move?
Rob Carrick - Beats me. I don't know nearly enough about you to say one way or another. Still, I can say that the dividend stocks in CDZ are an excellent way to generate retirement income. The emerging market stocks in CBQ are too speculative for retirees. The energy stocks in XEG are volatile, but they should benefit from long-term scarcity of oil.
[Comment From Worried Investor ]
Do you suggest waiting it out in the uncertain environment or selling to cut losses if the market tanks further. Thanks Rob.