Finance 12. Appreciate the more important things Finally, a word of advice on keeping volatility in perspective. If you’re mature enough to be reading this article, no doubt you’ve experienced a few trials and tribulations during your time on this earth. You’ve had your successes and your failures – some small, some not so small. But you’ve survived. And chances are pretty darn good that your portfolio will too. Sure, money is important and you want your portfolio to performwell – not only so that you can achieve your financial goals, but also so that you don’t have to lose sleep. But let’s face it: there are other things that matter too. Like crossing an item off your life’s to-do list. Staying healthy. Celebrating a grandchild’s birthday. Or just taking in the sunset. Ultimately, all of these things are just as important as obsessing about the ups and downs of your portfolio – some would say, even more so. TO RECEIVE THIS REWARD VISIT www.johnmcdermott.com/csa-dvd OR SEND A CHEQUE FOR $35 AND THIS AD, ALONG WITH YOUR RETURN ADDRESS TO BUNNYGEE MUSIC, 500 AVENUE ROAD, SUITE 308, TORONTO, ON M4V 2J6 IN CELEBRATION OF25 YEARSOF PERFORMING John McDermott has put together a handsome 2-DVD set of documentary and concert films from early in his career. As a thank you to CSANews subscribers, purchase the DVD for the special price of $25+ shipping & handling all those years JOHN McDERMOTT FOR CSA NEWS / CMYK / 7.5” X 4.75” 10. Implement protection strategies If you’re concerned about potential volatility, it may be a good time to initiate any number of equity protection strategies to minimize the effect of volatility on specific positions in your portfolio. One simple way to do this is to use stop-loss orders: a standing order with your broker and/or advisor to sell a given investment if it reaches a given price. Such orders are specifically designed to automatically limit your potential losses in the case of a market downturn. Veteran investors may also want to use options to hedge certain positions: by buying a “put” option on a given stock, you purchase the right to sell your position at a given price for a given time. Such flexibility can be extremely valuable in the case of a sharp, sudden downturn. More sophisticated investors with large portfolios may want to allocate some of their portfolio to investments that have a proven track record of non-correlated performance: hedge funds, managed futures, private equity and certain forms of real estate all fit the bill here. Historically, each of these assets has demonstrated an ability to balance out other portions of the portfolio that may move strongly to the downside in the case of further volatility. Keep in mind that such investments are not without their drawbacks: hedge funds and managed futures products can be notoriously opaque (managers rarely disclose their particular trading strategies); private equity investments may require you to tie up your money for several years; real estate can take a good deal of time to sell. Still, for veterans with large portfolios, these can be an option well worth looking into. 11. Talk to a pro If you find yourself obsessing over every bit of financial news, it’s a good time to consult with an investment professional. A qualified wealth advisor or financial planner can help give you a big-picture view of what’s going on in the market and determine what (if anything) you should do about it. Not only can your wealth advisor provide context for ongoing market volatility, he or she can also serve as a second opinion or “disaster check” on any decisions which you may want to implement. It’s hard to put a price on that kind of peace of mind but, if you’re staying up at night worrying about what might happen to your portfolio in the months to come, it’s probably worth paying for. CSANews | SPRING 2018 | 35
RkJQdWJsaXNoZXIy MzMzNzMx