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The past year was a roller coaster for investors. Many saw the value of their life savings reach all-time highs in early 2020, then drop by 35 per cent a few weeks later, only to rebound to new record highs as 2021 got underway. Such market volatility was a prime example of why investors need to maintain composure through good times and bad.

That can be tough, says Jennifer Tozser, senior vice president and portfolio manager with the Tozser Wealth Management team at National Bank Financial in Calgary. “Money is very personal,” she says.

What you know intellectually can be hard to control when you’re seeing your hard-earned dollars dipping and diving. As such, Ms. Tozser has some insights to help people avoid the pitfalls of emotional investing.

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Jennifer Tozser, senior vice president and portfolio manager with the Tozser Wealth Management team at National Bank Financial, CalgarySUPPLIED

How would you describe emotional investing?

Ms. Tozser: With investing, we talk about percentages. But when the market is falling, people refer back to dollars. They think about how long it took to save their money or what they could buy with it. It becomes very unsettling for people emotionally when they make that translation in their mind.

Why is removing emotions from investing so important to you?

Because I want clients to make money, but I don’t want them to worry. You can’t stay the course in investing if you are secretly so stressed out that you are second-guessing yourself and your advisor regularly. To evaluate how comfortable clients are, I ask whether their portfolio is keeping them up at night.

Should investors always be playing the long game?

The majority should. I feel that investing is a good habit like eating well or exercising. It is something that you commit to, and you don’t stop once your reach an arbitrary goal such as a certain age or dollar amount. In portfolio management, I focus on the trends and economic events that are going to unfold for the next 12 months and advise based on that. I really believe that people need a professional to help them stay the course. The unpredictability in the markets has certainly taught me the importance of having and maintaining discipline.

What gets in the way of rational decisions during times of turbulent markets?

People can be inundated with too much information. They think that if they have access to better or faster information, they’ll be able to get ahead of an impending problem. You have to accept that you can’t avoid the “black swans” of the market. You do have to strategize how you are going to manage them once they occur.

How does that lead to either overreacting or paralysis?

It leads to both. People might ignore what’s happening or exit the market and wait for “it” to be over. These types of decisions based on feelings aren’t in their long-term interest. Reading endless reports, tirelessly watching market prices or disengaging completely are avoidance techniques, not money management.

Is fear of missing out another danger?

Absolutely. That is another big emotional trigger. People are afraid they’re going to miss out on the next big thing. The stock market is so simple on the surface – buy low, sell high. But we all know there is more to it than that. People can buy because of investor momentum. Yet, there has to be some kind of fundamental basis there or you could be in big trouble when the momentum changes.

How can you break free from emotional decisions?

It’s incredibly difficult to be objective about your own money. You need an objective party to help. When something unexpected happens, you have to have a plan to ride it out. Over time, as your clients have been through ups and downs with you, they become confident that you can manage through adversity.

Have investor goals changed in light of how the pandemic played havoc with the markets?

You always need to be assessing your financial goals. They’ll change not just with the markets, but with your life. Did you just get an inheritance? A bonus at work? That will have an impact on your goals.

Are routine check-ins another way to get around reacting in the moment?

It’s important to reassess, once or twice a year, what you want and need to get out of your finances – both right now and down the road. You’re not going to have the same goals as your neighbour. You shouldn’t have the same portfolio as them either.

What can help investors put emotions into perspective?

Accept that there is a certain amount of risk. It’s part of investing. The stock market can have big highs and lows. Like a roller coaster, the more you go on it, the more you get used to it.


Jennifer Tozser is a senior vice president and portfolio manager with the Tozser Wealth Management team at National Bank Financial in Calgary. She has been in the wealth management industry for over 20 years, helping clients to create wealth, plan for retirement, make the transition into retirement, and create a legacy. Her experience has covered some of the best and worst markets in history, which she says has made her a better portfolio manager for it. Learn more about her practice here.

Legal Text: National Bank Financial – Wealth Management (NBFWM) is a division of National Bank Financial Inc. (NBF), as well as a trademark owned by National Bank of Canada (NBC) that is used under license by NBF. NBF is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor Protection Fund (CIPF), and is a wholly-owned subsidiary of NBC, a public company listed on the Toronto Stock Exchange (TSX: NA).

Advertising feature produced by Globe Content Studio with National Bank. The Globe’s editorial department was not involved.

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