What is going on?
What’s going on in the markets these days? When will the drop in oil prices end and start to make a recovery? Where is the bottom for equities? Are bonds and GICs safe? What sort of damage are the current economic conditions doing to my RRSPs, TFSAs, RRIFs, and Investment accounts? I’m sure that many of us are asking ourselves these questions. Many are concerned about the future of their investments and it’s no wonder. As an individual, where do you think the price of oil and the equity markets will be in 2 years time? Do you think they will be higher than they are today? If so, that means that we are in a time of great buying opportunity.
There was a very good article in the Financial Post section of the Edmonton Journal (and I’m sure the Calgary herald as well) on February 8th, 2016. It was written by Peter Dobson, CEO of 5i Research Inc. The article is entitled ‘Time to go Back to Basics’. I thought it was a very good article about market timing, dividends and the value of investing in a down market. I would urge all investors (especially during this volatile time) to read this article. I think you will find it very worthwhile. The portion of the article that captured my attention dealt with “time in the market” vs “market timing”. It dealt with a Business Insider report that looked at how important the big up days in the market were to investment performance. In a 10-year period (2003 -2013) a buy and hold strategy returned 9.2%. If you were out of the market on the 10 best up days, return dropped to 5.5%. If you missed just 60 days in that 10 year period, your return dropped to negative 4.4%. Wow!
If a person is trying to time the market, it would be best not to miss any of the good days.
– Jim Galpin