Monday, 28 January 2008

Bloggers tell institutional investors to stay calm and stick with plan as market weakens

In light of the recent article on the CBC website, titled "Advisers tell investors to stay calm and stick with plan as market weakens", a reply from the blogosphere is called for.

The CBC says:
After a nearly five-year run, investment advisers say it's time to stay calm, review your investment plan and look to defensive plays such as utilities, health care and consumer stocks to wait out the slowdown."

... Bloggers say it's time time to stay calm, stick with your investment plan, look for stock bargains among long-term high-quality companies and wait out the slowdown.
"Me? I’m sticking to my plan and giving this all some time to settle out." Canadian Dream: Free at 45
"During Monday’s panic, I actually went out and bought more banks." CanajunFinances
"Often the best thing to do is nothing, especially when our emotions are getting the better of us." Michael James on Money
"At times like these, amidst breathless front-page coverage of every gyration in the stock market, you can dust off your copy of The Intelligent Investor and find solace in the counsel of Benjamin Graham." and goes on to quote words saying to stay calm. Canadian Capitalist

Let us also note the results of a small informal poll conducted on this very website regarding the severe market slide of January 15-17. In answer to the question about what they did in response, 39%
of readers said they bought stocks they considered a bargain, 71% said they did nothing and were going to wait things out, 0% said they sold to pay for Christmas expenses or for other expenses and 0% (yes, that's a big fat ZERO) said they sold equities! Yes, sir, the average person on the street sure was panic selling!

In contrast, the CBC article quotes mutual fund managers saying,
"I think you have to continually look at your portfolio and make sure you're focused on quality and to the extent that you have more speculative or lower quality investments, you may have to have make a decision to exit some of those securities," Pym said." ... and ... "Watson said defensive stocks like utilities, health care and the consumer sector will be areas investors will want to look to." Ah yes, sector rotation, tactical asset allocation, market timing, those discredited and disproved strategies. Now we know who was doing all that panic selling in the last little while.


Michael James said...

Thanks for including the quote from my blog.

Among the blogs that I regularly read, the message was fairly consistent: stay calm. There is no way to find out, but it would be nice know how many people were prepared to sell in a panic, but stopped when reading these blogs.

CanadianInvestor said...

Why the big discrepancy between the amateurs doing the right thing and the pros doing the wrong thing, one might ask, though I won't of course!

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