The markets have not done well lately….the TSX in particular has gone down from around 15,000 points down to a bit less than 10,000 points as I wrote this (one week ago). Hopefully there will be some stunning rallies and we will all get a good laugh out of this outdated post!
I have to admit I’m handling the market drops much better than back in 2001 when I was switching out of equities – only to miss out on some of the increase which followed. However my dog-eared copy of Four Pillars of Investing – “Stay invested in equities” – is now getting a bit drooled on since I’ve taken to sleeping with it under my pillow. Bernstein’s wonderful book is the best way to put things in perspective – there have been much bigger drops than we have experienced and the market has always come back. Also – it’s too late to do anything if you are still invested – just ride it out.
Another idea I’ve heard around the blogosphere is that now is a good time to buy. While I don’t think that stocks are necessarily cheap (were internet stocks “cheap” in 2002?), the investment gods all say to buy when things look their darkest. Problem is that it has been dark for a while – will it get worse? Who knows? But the markets will come back – it just might take a while.
For those of us who are fully invested or just don’t want to buy anything right now – keep in mind that not selling is the same as buying. Not selling right now is a vote of confidence for your inability to time the market which nobody can do accurately over the long haul.