Don't Panic - Keep your Discipline

A friend of mine who recently started investing called me up the other day and asked for advice. I immediately reminded him that I'm not a financial advisor nor am I a financial planner but could provide him with advice on what I would do if I were in his situation. To summarize the call, my friend was basically panicking the whole time. He had been watching cbc news the last 3 days with the TSX and DOW dipping every single day. With staggering losses across the board, you'd be hard pressed to find a balanced portfolio that wasn't affected.

He asked me bluntly. Is now a good time to sell? I don't want to lose any more money, he said. As I knew about his situation from before (he's specifically saving for retirement), I told him to hang in there and be disciplined.

In times like this one of the most important things to remember is too stay disciplined and keep a long term strategy (provided you are investing for the long run) and understand that there are blips in the markets. Although we all wish for the markets to ascend in a beautiful straight line, it rarely does so. After assuring him that he really shouldn't sell low, he calmed down.

I'm glad that my friend called me today. I didn't want to see him selling all his stocks as a trigger reaction to this week's events. I know it's human nature to want to sell and get out of a tough situation but if we remember to keep a long term focus and stick with a balanced portfolio of historically stable blue chips, there is a high probability that one will be okay in the long run.

Thanks again for reading the Canadian Dollars Blog.