Investing During Bear Market -Stay the Course

Stay the Course is a Sound Investment Strategy


With the recent market turmoil, investors should focus on the virtues of remaining patient, having a long-term view, and staying the course in up and down markets.

Most individuals miss the movement of stocks and underperform. That difference comes down to timing. Investors consistently get in and out of the market at the wrong time.

They panic and sell at market bottoms. They grow euphoric and buy near the tops. Worse, they move to hot sectors or investments, but fail to catch the big moves.

Over the past 30 years, the average investor earned just 3.7% a year vs. the average return of the S&P 500 index which is compared with 11.1% for a simple strategy of buying and holding the S&P 500 Index.

This is what keeps investors from reaching their full potential – poor planning and emotional decision-making.

The best strategy is to dollar cost average your investments, you just need to start investing, and then stop messing with it.

That is not to say, you shouldn’t monitor your portfolio. I recommend you track stop loss alerts, using an online service or even a Microsoft Excel spreadsheet.

Effective next month (February 2016) investors will be limited on what they can do directly with their brokerage accounts as new rules go into effect that limit if not eliminate the use of brokerage stop loss limits.

You should track your own stop loss alerts anyway, so the new rule shouldn’t have much impact on you. If in doubt to the new rules, call your broker and ask for an explanation.

Lastly I suggest you stop watching the “talking heads on CNBC” and other financial news networks, they will only get you to make emotional investment decisions that will only end up hurting your portfolio’s returns.

Bottom, watch your stop loss alerts and stay the course.

Daniel F. Iuculano, AAMS CMFC

Accredited Asset Management Specialist

Chartered Mutual Fund Counselor

 

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