investment risk management Archives

Betting on the Markets Being Wrong – Don’t Take Those Odds

Post published:March 24, 2025

A common refrain in investing is that news and expectations are already "priced in”. I often say this publicly and in individual client meetings. When clients are concerned about changes in the market and want to act on what they are hearing, I remind them that the market is ahead of the media rumblings and that snap financial decisions tend to sabotage positive financial outcomes. So, it is much better to hold firm with your investment strategy, that should be based on a sound financial plan, rather than reactively sell, because those who react are most likely reacting too late. And I’m not just guessing. I’m advising based on my experience and deep understanding of how markets work. The reality is that those who stay disciplined see much better performance than those who try to bet on market mispricing and make changes.

Read more about the article Real Life Investment Strategies #7: A Better Alternative to Blindly Following “Investment Tips” including Focusing on Current Income or Yield

Real Life Investment Strategies #7: A Better Alternative to Blindly Following “Investment Tips” including Focusing on Current Income or Yield

Post published:February 25, 2025

Why Investment Tips Fall Short … and What to Do Instead Much of what passes for financial wisdom is built on speculation, short-term thinking, and hype. Stock-picking, market timing, and economic forecasts might make for engaging headlines, but they don’t hold up under scrutiny. The reality? An evidence-based, disciplined approach to investing is far more effective. Let’s have a look at some mainstream investment advice you might be hearing people talk about or maybe some investment rules-of-thumb that are not likely to pan out for you, if you follow them…

Timeless Financial Tips #1: Repeat After Me: “It’s Already Priced In”

Post published:February 11, 2025

A key concern many investors have at the moment is the impact of Trump's tariffs on goods produced outside the U.S. on the markets. I'm hearing from those wondering if they should sell quickly to protect their wealth; their primary question is: What should I do with my investments? My answer (as it usually is when investors are concerned about the geopolitical impact on the markets): Stick with the plan because, by the time you become concerned, the markets have already pre-adjusted (i.e. it's priced in), so any reaction you take is too late.

Real Life Investment Strategies #6: Beware the Risk of the Cult Stock Roller Coaster

Post published:December 11, 2024

The Pitfalls of Fanatically Following the Stock Hype It seems to me that the central tenant of the financial media (group-think central) is to glorify stocks or sectors that have experienced recent outsized returns. The hype of cult stocks extends and is amplified by social media channels and its various influencers. Ask any reputable financial economist about these past monumental gains and they will indicate that “past performance is not indicative of future returns”. Despite the restrained advice of these financial experts, it’s easy to get swept up in the hype surrounding these popular stocks and investment trends. Some choose to surrender to FOMO (fear-of-missing-out) and follow these financial fads. for the chance of scoring a big financial win with a little excitement on the side. While these stocks may seemingly promise rapid growth, there are some obvious (and not-so-obvious) risks of chasing high-flying stocks. It’s important to consider the other option: a more thoughtful, measured investment plan. Maybe not as thrilling, but certainly a better path to reaching your long-term financial goals. Let’s explore some examples of how some stocks can achieve a cult-like following and a take realistic look at how they could play out for some real-life investors.

2023 New Year Insights from an Independent Financial Advisor

Post published:January 18, 2023

After years of focused financial planning, 2022 (and the previous few years) may feel like it’s upended your financial future. Although 2022 gave us unwelcome results, weathering these market storms does take some dedicated resolve to stay on course to meet your long-term financial goals. So, with this new year upon us, let’s round up some of the best blogs from 2022 to help support your 2023 financial planning decisions.

This Is Your Investment Brain on Pessimism

Post published:October 21, 2022

Have you been reading the headlines, viewing your investment portfolio, and assuming the worst is yet to come? Welcome to your painful crash course on what market risk really looks like—and more importantly, how it feels. Most investors say they’re ok living with periodic market risk, as long as it helps them achieve better returns over the long run. We accept (in theory) that tolerating the interim damage done to our own investment portfolios will help us meet our long-term financial goals. But that’s investment risk in theory. Since it’s been a long time since we’ve encountered an extended bear market climate, you may have forgotten or never known the reality of it. It may not have clicked then, when significant market declines happen, it is usually due to despairingly bad news … amplified by headlines screaming how things are only going to get worse from here. The reality is, when we’re in the middle of a storm of stuff, our behavioural biases make it very difficult to believe we’ll ever see better days.

Mid-Year Observations – 2022: The Impact of World Events on Investments

Post published:August 15, 2022

There is no denying that this year – 2022 – has been a roller coaster for investors. With the geopolitical climate impacting markets, interest rates rising, unexpected high inflation and a possible recession looming… there is a lot to navigate. It’s mid-2022 and a perfect time to revisit what’s happened so far and how best to cope with the intimidating financial markets. Let’s start with the big action items that have impacted the markets in 2022…

Time to Go on a Financial Media Diet

Post published:July 21, 2022

Stock and bond markets plummeting in tandem, the war in the Ukraine, rises in interest rates, threats of a looming recession … You’re probably already well aware of the volume of news wearing us down. As I wrote to my clients, “the financial press has gone on a feeding frenzy in response, serving up heaping helpings of negativity upon negativity.” On many fronts, times are indeed disheartening, and we’re as worn out as you are by the weight of the world. That said, there are already way too many outlets cramming worst-case scenarios down our throats and crushing investment resolve. To offset a bitter pill overdose, following are a few more nutritious news sources to reinforce why we remain confident that capital markets will continue to prevail over time, and that long-term investors should just stick to their plan.

Six Ways a Recession Resembles a Bad Mood

Post published:June 20, 2022

There’s been a lot of talk about recessions lately: Whether one is near, far, or perhaps already here. Whether we can or should try to avoid it. What it even means to be in a recession, and how it’s related to current market turmoil. To put market and recessionary concerns in perspective, it might help to describe six ways a recession resembles a bad mood. There are some intriguing similarities!

Investment Fads and Other Destructive Behaviours

Post published:April 14, 2022

Chasing Investment Performance Results in Far More Losers than Winners Would you like to improve your investment game? Counterintuitively, you don’t necessarily need to master more fancy moves; it may be a more powerful play to simply reduce your biggest investment mistakes. It’s those false moves that usually cost you the most gained ground.