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A reader says he saved $130,000 in advisory fees by taking his portfolio in hand and picking his own investments.

He estimates he's made an average 7-per-cent return over the past decade or so with a portfolio that is now invested in a 50-50 mix of guaranteed investment certificates and stocks in sectors like banks, utilities and telecom. He fired his adviser after a big loss in the 2008-09 stock market crash. His portfolio is big enough that eliminating his 1.5 per cent advisory fee has saved him a six-figure amount.

This reader's a textbook example of how you can cut fees by handling your own investments and achieve extremely good results. But he's also representative of the kind of thinking that is all too common among investors today. They're assessing their investing chops based on the long bull market that followed the crash, and not on a full market cycle that includes the correction that follows all bull markets.

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We've had a couple of poor years for the S&P/TSX composite index over the past 10 years, but we have not been tested by the kind of gut-wrenching correction we saw in 2000-01 and 2008-09. An investor who holds lots of Canadian blue-chip dividend stocks and has significant exposure to U.S. and international stocks should have done quite well overall.

Kudos to you if you have squeezed the juice out of this bull market. But don't get cocky. One hellacious quarter for stocks could hurt both the short- and long-term returns for your portfolio. Now's the time to plan for this. Rather than coasting with a portfolio that has excelled in recent years, do a year-end assessment that considers your stocks/bonds mix. If strong stock market returns have resulted in bonds having a smaller footprint in your portfolio, do some rebalancing to get back to your ideal asset allocation. Spend some time as well on your mix of stocks. Speculative investments will get hit the hardest in a correction. Might it be time to take some profits on your best performers?

Bad results in the last stock market crash caused many investors to take over their portfolios. The true measure of how well they've done will only come after the next crash.

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