New Year’s resolutions feel good when you’re making them, but rarely have an impact on behaviour since they don’t tend to last beyond the first few days or weeks of the year.
Gyms are the poster child for this lack of staying power. Right after New Year’s, you need to fight for a machine or a place on the mat. It stays that way for a couple weeks and then the numbers start to steadily drop until, by February, everything is back to normal.
I’m not inclined to make resolutions, but I encourage investors to do so. Why the contradiction? Well, investment resolutions are different. One month at the gym and the next 11 on the couch amounts to no good, but if you put your head down and work on your investments in the first few weeks of 2021, you can set yourself up for months, perhaps years.
Look in the mirror
You’re the CEO of your portfolio. Whether you’re an experienced investor or raw rookie, the buck stops with you, so your 2021 resolutions should revolve around the high-level questions a CEO would ask:
Am I saving enough?
What’s the purpose of the money: i.e., retirement, kitchen renovation, down payment?
Is what I’m doing working?
Am I ready for the next market dip, whenever it comes?
And, a related question, what did I learn about myself from last year’s extreme volatility?
These questions should be answered with the utmost intellectual integrity. Don’t let yourself fall into the trap many investors do, which is to take credit when their stocks or funds are going up, and blame the market when they’re going the other way.
Your self-evaluation should include an assessment of your strengths and weaknesses. This will help with the next step of the process: assessing the people who work with you on your portfolio.
Review your employees
Last year was very revealing because it tested the mettle of everyone, including advisers, investment managers and discount brokers. This makes January 2021 a particularly good time to sit back and assess the investment professionals you work with.
Here are some questions you should think about:
How prompt and effective was the service?
How transparent were they about long-term returns and fees?
Was the investment advice timely and useful?
Are their strengths your weaknesses?
Do I trust them to put my interests first?
If the answers to these questions are unsatisfactory, then it’s time for a change. If you’re supposed to hear from your adviser regularly (and are paying fees for it,) but didn’t get a call in the first half of 2020, or the whole year for that matter, then you’ve got grounds for divorce.
Revisit your strategies
It’s tempting to dive into your individual holdings, but resist until you’ve confirmed that each of your investment buckets has an appropriate strategy.
I’m specifically speaking about asset mix. For example, there should be little or no equity exposure in the “kitchen renovation” bucket. On the other hand, the “winters in California when I retire” bucket should be mostly in equities.
The past year was a wild one and many investors scored big on tech, gold and health-care stocks, but that doesn’t negate the importance of having the right mix of asset types for each investment goal. Your passions and hunches still need to fit into an overall portfolio.
Automate your routine
One of your 2021 resolutions should be to automate as much of the process as possible. This is especially important if you’re a disinterested investor and your resolutions are likely to fall by the wayside.
I’m talking about things such as reinvesting dividends and fund distributions, and setting up pre-authorized contributions, or PACs, whereby your registered retirement savings plan (RRSP) and/or tax-free savings account contributions automatically come out of your bank account each month.
This routine takes the stress out of RRSP season, gets your money working sooner and, importantly, dials down the emotion that goes along with investing.
Perhaps the best automation tools you have are balanced funds that, in combination, align with your goals and risk tolerance.
If you act like a CEO for at least a few weeks and address the higher-level questions, then implement your strategy using an appropriate balanced fund(s), you’ll benefit long after the New Year’s glow wears off.
Tom Bradley is chair and chief investment officer at Steadyhand Investment Funds, a company that offers individual investors low-fee investment funds and clear-cut advice. He can be reached at [email protected]
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
