It might sound counterintuitive at first, but sometimes markets going up can be more stressful than markets going down.

 

The market ups and downs may be worrying to watch, especially when combined with political turnover. While it's natural to have reactions to the volatility we are experiencing, it's also important to understand the impacts of reacting.

 

The most common reaction to market volatility is to sell the portfolio and go to cash. The risk of this reaction is that you may miss out on some of the market’s best days.

 

On the surface, this doesn't sound too consequential. However, as you can see below, missing out on just the best 5 days over the last 40 years could affect portfolio returns by almost 40%. Imagine the impact of missing out on the best 3 or 4 months!

 

 

History has shown that staying invested and keeping within your risk profile provides better long term returns than trying to time the market. If you want to schedule a call to discuss further, please reach out at anytime.

 

I have also included a report from our CIBC Economics team entitled “The Taylor Rule”.

 

As always, if you have any questions, please feel free to give us a call.

 

Have a great weekend.

 

Milan