What advisors are doing (or not doing) with their own portfolios in this bear market

Four advisors share their strategies for navigating a slowing market

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The stock market is known for its ups and downs, where investments can see good returns before they falter, or vice versa. The “bull market” is a market where there are increases in value of 20% or more over a minimum of two months. As expected, due to rising inflation, we are currently in a bear market, where there are more than 20% declines in value on stocks.

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As an investor, a bear market is a key time to consult with financial advisors and planners to find out what can be done to lessen the effects on your portfolio.

Some advisors are also investors, personally affected by market developments, and even more attentive to how to help their clients. We spoke to four advisors across North America to ask what they do with their own portfolios and what they tell clients.

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The answers were varied, but the four advisors have common lessons that any investor can use to navigate the ups and downs of the market.

Long term outlook

Elke Rubach, President of Rubach Wealth in Toronto, Ontario. doesn’t look at her portfolio because she’s a long-term investor focused on the next 10-20 years and her portfolio is “really boring.”

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“I’m not at high risk. I didn’t go buy bitcoin to begin with,” she says. “My portfolio is diversified between [commercial and personal] real estate, insurance and funds which are already diversified, some are up, some are down, but that’s not the money I need right now.

High risk investments

Herman Thompson Jr., financial planner at Innovative Financial Group in Atlanta, Georgia, says he checks his wallet when he makes a transaction.

“It would be hypocritical of me to tell my clients that I know what they are investing in but I don’t know what I am investing in.”

Thompson continues his dollar cost averaging strategy: putting a certain amount of money into the market each month. Some go into his 401K or into investments. As the markets are closed, he takes a little more risk with his purchases.

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“What I’ve done in my dollar-cost averaging is increase the volatility. I want to buy the riskiest things I can buy right now because they’ve suffered the most. »

One of these risky funds is owned by an investment bank that owns a mutual fund company. Thompson says this bank has “the best growth managers in the world,” and since they’re down 40% for the year, he buys into the fund every month.

Other than that, he maintains a strong cash position for his short-term investments.

keep things the same

Then there are counselors who explain everything online. Robb Engen, a paid financial planner and co-founder of Boomer & Echo in Alberta, recently wrote a blog post titled “How I Invest My Own Money.”

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“I wanted to show how your financial strategy or your investment strategy shouldn’t change based on current market conditions,” he says. “It should be something you can stick with long term. In my case, that means I don’t chase things a little better and don’t freak out when things don’t go so well.

Like other advisors, his portfolio is diversified. He currently invested in Vanguard’s ETF VEQT, which has 13,000 stocks around the world bundled into a single product. This way, it’s harder to see each individual stock, so there’s less chance of worrying about underperforming stocks. He also has money in a tax-free savings account to supplement his down payment on a new home.

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Stay focus

John Sacke is an Investment Advisor and Portfolio Manager with BMO Nesbitt Burns in Toronto, Ontario. He doesn’t manage his own wallet, “I find that the emotional attachment one has to one’s own money influences your bias.”

However, Sacke makes five trades a year that represent less than three percent of his portfolio, mostly for fun.

Sacke owns 85% equities and 15% fixed income securities such as bonds and preferred stocks. He is not worried about the market going down because history has shown that he will recover and often exceed previous profits.

Key points to remember

When it comes to advice on managing bear markets, all advisors were on the same page:

  • Don’t react emotionally and take your money out of the market, because markets move in cycles and what goes down will go up.
  • Don’t try to time the market, instead, as Rubach says, “it’s market time, not market timing.”
  • Understand your risk tolerance. This way you don’t make risky purchases in your portfolio.
  • Have a diversified portfolio. Thus, the worst performing assets will be offset by the best performing ones.
  • If you are unsure, work with an advisor. “Choose an advisor you trust and enjoys working with people,” says Sacke.

When it comes to bear markets, no one loses sleep. As Sacke says, “I might look at my portfolio late at night when I can’t sleep. I don’t worry about my money, I just don’t sleep very well.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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