Finance allocating and rebalancing the portfolio, finding a trusted advisor can be a good way to get a lot more comfortable during times of volatility. Not looking to completely outsource your investment decisions? Simply investing in an actively managed mutual fund or other pooled investment can be an excellent way to take advantage of expert-level investment knowledge and skill, and get rid of the potential problem that comes with investing based on emotional responses to market movements. Full disclosure: you’ll pay more for professional management. Most financial planners and wealth advisors charge you fees based on the amount of money that you hold with them. With mutual funds, there are additional management costs, trading fees and (possibly) tax implications. In most cases, these fees are small on an absolute basis, but are much higher than they would be with comparable exchange-traded funds. Even so, for some investors, the added costs will be well worth it. Investigate strategies that take advantage of volatility Most of the time when we talk about investing, we talk about making money as our investment gradually increases in value over time − usually over several years but, if we’re lucky, much less time than that. In financial parlance, that’s called being “long”; youmake money as the price of the underlying asset increases in value, either quickly or over the long term. Sophisticated investors, however, use other strategies to make money. They go “short” − they make money as the price of an investment decreases in value. They might sell to others the right to buy existing positions from them at a certain price, thereby generating income from an investment that goes sideways in value for extended periods. Or, they might buy options to sell positions at a predetermined price, thereby protecting their gains from a sudden, unexpected market downturn. Let’s be clear here: most of the above strategies are best suited to experienced, knowledgeable investors with sizeable portfolios − those who follow the markets closely and are comfortable making their own investment decisions based on changing information. But if you’re interested, they can be an excellent way to use volatility to your advantage. AND ONE BONUS TIP...please, take care of your health It’s almost too obvious to mention but, in these extraordinary times, it bears repeating: if you don’t have your health, you don’t really have anything. Let us not forget this essential lesson as we consider how thousands of our fellow Canadians − and many, many more of our cousins to the South − have been struck down by COVID-19. By the time you read this, there may well be a vaccine that protects us from this disease. But if there isn’t, we now know that there are several simple, easy-to-follow procedures that can protect our health, and the health of those around us. So please: wash your hands. Wear a mask. Stay two metres away from others. Until we come up with a vaccine, these simple common-sense routines are the most significant investment which we can make: not just in ourselves, but in everyone. CSANews | FALL 2020 | 35
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