Making Friends with the Bear

Bear fight

Like everyone else who has non-fixed income investments, I have felt the pain this year like you. When you put your money at risk you should in fact be aware of “the risk” and have the stomach to ride it out. No one, and I mean no one gets a free ride. If you go to sleep in a deep sweat at night worried about losing 15% of your investment, then you should not be in the market. Every investor should know that a balanced fund should always include cash and fixed income portions to counter balance the risk of equities. Mutual Funds (not my choice) do this automatically as they spread both the gains and losses over a wide swath of instruments.

If you’ve ever looked at my “Rick’s Picks” you won’t see very much change, even during this volatile period. It’s important to keep your head above the noise and realize that external forces are driving this Bear Market not fundamentals. Some of the 2015 forces included:

  • Oil prices (even the Saudi’s can’t keep this up forever)
  • Demand from China (Market is maturing)
  • Low Growth (Mature markets and economies here to stay)
  • Interest Rates (artificially low)

So instead of fighting the Bear, learn from it, make friends with it, and use it to your advantage. How you say?

  1. Watch your portfolio and the 52 week low points as they come up and buy into your gems on the cheap.
  2. The stocks on your wish list that were out of reach are probably cheap now-Load up
  3.  Take advantage of DRIP plans to lower your acquisition costs and “buy low” automatically

Bottom line, keep your head on your shoulders, don’t follow the crowd, and continue to do your research based on the fundamentals.

 

Till next time…

Rick

 

Published by

rickbarbosa

Our Senior Partner Rick Barbosa is a Professional Accountant and Personal Financial Advisor with over 20 years experience dealing with Large Fortune 500 Organizations and Small to Medium sized Family owned Businesses. If you're looking for help with your finances, taxes, investing or starting and managing a business you've come to the right person.

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