The stock markets have had some rough days lately. At some point, setbacks like these will become a regular thing and the markets will officially begin the next big correction.
If you’re a buy-and-hold investor, stock market corrections are torture. But they’re also an opportunity to buy stocks. “For buy and hold to truly work you have to do both when markets are falling,” portfolio manager Ben Carlson says in a must-read list called 36 Obvious Investment Truths.
Mr. Carlson’s list is essential reading right now because it will help reinforce good investment habits at an uncertain time for stocks. It’s also a great reality check for investors who overestimate their skills after a long bull run for stocks and may have portfolios that are too risky. I particularly like these deceptively simple reminders:
- There’s no such thing as a perfect portfolio, asset allocation or investment strategy.
- No investor is right all the time.
- No investment strategy can outperform at all times.
- Proper diversification means always having to say you’re sorry about part of your portfolio.
- There is no signal known to man that can consistently get you out right before the market falls and get you back in right before it rises again.
A stock market correction, whenever it comes, is a natural part of investing. When it comes, your best move is probably to buy more stocks.
Subscribe to Carrick on Money
Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.
Rob’s personal finance reading list…
Seniors living the high life
A fascinating look at how increasingly common it is for seniors to live in high-rise buildings and how they’re managing their lives.
This is now much you save by cooking at home
The Pricenomics blog breaks down how much you save when you make dinner at home instead of ordering it. It’s a lot – probably more than you think.
About that lunch you buy every day
Bringing your lunch every day can save you thousands of dollars a year, but it’s a hassle. Here are six strategies for becoming a disciplined bringer of lunches.
Stocks in retirement? Here’s how much
An expert quoted here says retirees should have 35 to 55 per cent of their portfolios invested in the stock market. Traditional thinking has always dictated a retreat from stocks when you retire.
Today’s featured financial tool
Lost money due to bad investment advice? Check out this handbook on the complaints process in the investment industry. It was written by lawyers who represent clients in investment-related lawsuits.
Q: “I will convert my RRSP in a couple of years to an RRIF. Right now, the RRSP is invested in stocks and ETFs with a big bank online brokerage. Will I need to get an adviser when I convert to a RRIF, or can I do it online myself?”
A: An adviser makes sense if you want help, but you can do it yourself. In fact, I wrote something of a manual on how to do it.
Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length.
In case you missed these Globe and Mail personal finance stories
- Feel like life is built for two incomes? Here are four single-person money-saving tips
- Tax breaks from insuring a child’s life can have cascading benefits
- My dividend-growth portfolio report card: Good, but with room for improvement (for Globe Unlimited subscribers)
More Carrick and money coverage
For more money stories, follow me on Instagram and Twitter, and join the discussion on my Facebook page. Millennial readers, join our Gen Y Money Facebook group. Send us an e-mail to let us know what you think of my newsletter. Want to subscribe? Click here to sign up.