Time to Take Stock Seminar Series
The pullback of the stock market in 2008 left a lasting impression on many investors.
On January 27th & February 4th, 2014, Pat Flemming of CommonWealth Partners welcomed Shawn O’Brien, Senior Advisor Consultant of Franklin Templeton Investments Corporation for an informative evening to take stock of the current situation facing investors. They discussed the human behaviour that helped land us here and how investors could rebuild their portfolios to reach their long-term goals. In addition, we discussed:
- In Canada there is Trillion dollars sitting on side lines...the problem....it won't buy you much. More money idle in cash than our American friends on a percentage basis. This money will eventually have to go back into the market.
- Dilemma facing many investors...investments are at a standstill.
- Decisions are often formed by our perceptions.
- Availability bias. Our behaviour is strongly influenced by what is personally relevant, recent or dramatic. In 2008 and 2009, lots of bad news about the markets. When it comes to financial matters we tend to focus on the negative.
- Even though the markets were up, most investors believed that they lost money.
- Investors are starting to go back into equity markets.
- Loss aversion. The pain of loss is more pronounced than the joy of gain, which is why people are still hesitant about getting back into the market.
- Perceived safety may come at a cost. People feel they can't take the risk of equities. Reality is money invested in cash for retirement will not grow at the rate of rising costs.
- 2008 lots of money came out and people kept taking it out. People were older and found it harder during this challenging market.
- Best asset class over 10 years...stocks.
- Too many people have TFSA in money market or savings account. This is not effective use of the tax savings potential offered.
- Benefits of staying in invested. .... Missing top days in the market has major negative effect.
- Buy shares when they're on sale. Keep buying over time.
- From an investment perspective biggest cost is behaviour. We have to try and control our emotions and stick to the plan.
- Importance of having a financial advisor ... To help you deal with the emotions and stay on track, even during challenging markets.
- US unemployment has declined from its peak.
- US corporate cash near all time high. Companies have lots of cash to invest.
- Pay out potential appears strong. (Dividend payout)
- Investors still not convinced. Loneliest bull market in history.
- World's middle class is growing....means we can consume more goods. People have more money in their pockets.
- Global consumption is increasing.
- All equity markets are fairly priced. Not cheap but cheaper than they were historically.
- Sir John Templeton..."Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria."