Staying ready is an important investment strategy
A couple weeks ago, the S&P 500 posted its worst daily performance since May 12 and the Dow Jones suffered its largest one day drop since July 19. September generally is historically a less than ideal time for portfolio growth but throw in remaining delta variant concerns as well as varying global market concerns and seeing some red shouldn’t be a surprise.
It’s easy to be scared off and prefer to ignore your investments, claiming you’re just going to “ride the wave.” Riding the wave is fine, and a perfectly normal investment strategy, but it’s still important to do your due diligence on your current investments. Riding the wave doesn't just have to be about sitting idle and staying patient, dollar-cost-averaging can be very important, too. Holiday season is coming and considering where the market is right now there’s no better time to review where you’re at following these keys:
DO YOU REALLY BELIEVE?
You may have investments that are significantly down right now -- 20, 30, maybe even 50 percent. Now is the time to ask yourself how much you really believe in these investments. If you don’t believe as much in a particular investment whether it be the company itself or the industry, then riding the wave and hoping things improve is the best way to go. For me, personally, unless there are massive red flags, this is not the time to cut your losses.
On the other hand, if you genuinely believe in a stock you own but it just happens to be at a low, viewing the percentage your stock is down as a sale opportunity. A massive discount on a company you really believe in? If that’s enough of a discount for other products you buy then apply the same mindset: this is an opportunity.
Speaking of opportunities, think about the world in front of you. Is there an industry worth exploring that you haven’t before? I’ll give you a personal example – this is absolutely not instruction or advice: When the COVID-19 pandemic first began, it seemed logical to me that telehealth would see a boost. I’d never explored the industry before but this seemed like sensible timing. I made purchase decisions accordingly and it happened to work out. You still need to do your research on which companies make the most sense and act accordingly.
Don’t want to make decisions that way? Read. There are plenty of resources available and if you’re financially savvy enough to absorb it, there are markets that will make sense to you and won’t.
What goals did you have at the beginning of the year? What would you like to achieve over the next few months. For me, I like using this part of the calendar to evaluate where I want to be come RSP season. I don’t like to make a last minute deposit so this is usually when I’d assess where I am with my contributions for the year and where I want to be by February.
Are these investments going towards a down payment on a home or a new car or any of those major purchases in the near future? Assess your investments accordingly and either act now or… you know it… ride the wave!