The lure of record high stock markets

Review your portfolio before jumping in

The Dow Jones Industrial Average is reaching all-time record highs. So is the S&P 500 Composite Index – amidst a pandemic and a recession, no less. And smaller investors are jumping on the bandwagon. Should you join the fun?

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Dealing with market scares

Resist the urge to “do something”

Unless you’ve been away on vacation in a secluded place, you’ll know that stock markets sank alarmingly earlier this month as the U.S. Treasury bond yield curve “inverted” – that is, the yield on short-term bonds climbed above the yield on long-term bonds, albeit only very briefly. Fearing that an inverted yield curve signals a recession (as it often has historically), traders went into full-on panic mode, dumping stocks and moving to “safe haven” investments, like gold and, yes, bonds. The big North American stock market indices consequently lost ground, some sinking by triple-digit amounts in a span of two days. So is it really time to panic, sell all your stocks, and hunker down with your piles of cash? READ MORE

Three principles for battling market anxiety

What to do when markets seem to go crazy

When stock markets suddenly begin to drop alarmingly as they did at the beginning of February, many investors will contact their brokers and advisors and start selling things. Others, however, seem not to be so anxious, and while concerned, do not “ride madly off in all directions,” as the old Stephen Leacock quote has it. So what’s the difference here? As financial advisors, we see both types of financial personality, more of the former than the latter. What does it take to get yourself into the group that just isn’t as fussed about market setbacks like this? READ MORE

Volatility returns to markets

More normal trading patterns likely to emerge

Volatility returned to the stock markets, seemingly very suddenly, at the beginning of February. It was hard to avoid panicky headlines shouting about the 1,175-point drop in the Dow Jones Industrial Average on Monday, Feb. 5. Some are already calling it “Black Monday.” All the other major stock indexes followed suit. Toronto’s benchmark S&P/TSX Composite Index fell 271 points. And the broader U.S. blue-chip S&P 500 Composite Index fell 113 points. At one point during the week, several indexes briefly entered “correction” before recovering somewhat. Is it a “crash,” a “correction,” or a “healthy” revaluation? And what – if anything – should you do about it as an investor? READ MORE

Market slump not the time to reset portfolios

Periodic volatility means opportunity

I wish they’d make up their minds, don’t you? To listen to assorted talking heads in the business media, you’d think that the current slump in crude oil prices to around US$60 per barrel is something just short of the end of the world. Not too long ago, the same gang was wringing their hands about oil being priced at over US$107 per barrel. The biggest danger for investors: listening to them. READ MORE

How to stop fretting about the markets and enjoy your vacation

Remember this one key principle of investing

When you’re relaxing at the beach or cottage, or doing the grand tour somewhere, you don’t want to spend much time fretting about your investments. If you’re continually worried that stock markets are on the verge of a major correction, you’re doing something wrong. Here’s how to stop fretting and start relaxing. READ MORE