TheAnswerIs.ca
A Bad Day
Mar 10, 2020 - Can a bad day in global stock markets be a good day for you?
Global stock markets dropped significantly today, for example, the US S&P 500 was down almost 8%, and the TSX was down over 10%.
This significant drop in global stock markets means the “shoes”, (I mean stocks and ETFs) you have been waiting to buy, are now on sale!
If an investor has some cash available, and does not need access to that money for a minimum of 10 years and preferably longer, then today’s sell off may well be considered a very good opportunity to invest a portion of this cash, rather than a “bad” day in the markets. This about having the right perspective or “Head space”.
With respect to the model TheAnswerIs.ca portfolio, three of the ETFs in this portfolio are now about 20% cheaper than their previous 52 week highs. These include the Toronto Index, US Index, and Developed Markets (ex USA) Index, ETFs. The Emerging Market Index is down about 15%, and the REIT and Utilities Indices are down about 10%.
For more on how to handle “bad” days in the markets please check out the following links:
https://theansweris.ca/risk-volatility.php
https://theansweris.ca/Q22.php
And of course important perspective can be obtained by referencing one of the greatest long-term investors of all time, Warren Buffett:
"If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during this period? Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. This reaction makes no sense. Only those who will be net sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices."
Invest long-term and prosper, (wink to Star Trek).