think of the Easter Bunny you probably see something in your minds eye like a
cute fluffy little bunny with big floppy ears, a bow tie and a cheesy grin
hopping around collecting eggs in his little wicker basket while he sings some
song not having a worry in his head. On the contrary when you think of firemen
the image most have is of a bunch of guys running controlled straight into the
fire that everyone else can’t get away from fast enough. They have all their
equipment and are fully prepared for most anything that could happen so when
something does happen they can react quickly. Now think of your investments and
your approach to them. Which one is you and the way you invest? Why?
Do you only go into the bank once a year or so (if that) to look at your investments, maybe toss a few more dollars into where ever you had them for the last 5 or 6 years and then just hop away thinking you’ve done something for your future? Be honest, think RRSP season each January and February? Or are you taking advantage of world markets and events? Ohhhhh, but you don’t want to follow the Bloomberg Business reports. The business section of the local paper might as well be written in Klingon for all you understand of it (the only Star Trek/Star Wars reference I’ll ever use, I promise) and those business channels that came with your cable package put you to sleep faster than a full bottle of cough syrup. None of that matters.
opportunity’s all around us, everywhere, everyday. Some are small and local
like the neighbour that just passed and their kids that want his house sold
ASAP so you could probably pick it up before it even goes to the open market
and very possibly undervalued if you acted quick. Other options come about on a
much bigger scale but somehow often get unnoticed because they are clouded in
related stories of major, public events. Greece,
the Elections (in both Cdn and the US), gas prices plummeting, the
recent ‘China Correction’, a new business in your neighbourhood, etc, etc, etc.
Think of these type of events in these markets (that people will still continue
to use during and be in after the storm settles) as being a boxing day sale for
investments, but just like a boxing day sale you wouldn’t take the kids college
fund or house payments to go buy a bunch of 1/2 priced sweaters, buy
We live in
one large world market where a person can physically be anywhere within a day
and information now transfers at the speed of a Smart Phone as everything
becomes more and more interconnected. Don’t agree? Flip channels on your TV
from station to station from different cities and countries and look at how
many stories on the news (aside from regional stories like road closures and car
accidents) are the same. Just look at your Facebook, Twitter or other social
media feeds and how many of those jokes, stories, thoughts and ideas are
regurgitated with more regularity than a Mother to her baby birds. Its all
around us. Now you can’t and shouldn’t act on all of this info but when
something happens somewhere it will often ripple far and vast. Here’s a couple
2008 when world markets hit the toilets with a huge splash!!! Major banks,
businesses and economies including the US were beat up worse than MMA
fighters. Did you think they’d be knocked out forever? Did you think that arguably
the worlds most powerful economy (the US) wouldn’t rebound? No of course
not, but did you invest when these markets and sectors that dropped so
drastically? FYI, After the initial shock wore off they returned to being
profitable quite quickly and today many US investments are incredibly strong.
You could have done very well capitalizing on this. Where were you invested at
this time? Was it in the investment equivalent of a dust collector? Are they
still there today? Ok, To risky? How about simple US dollars? Our Canadian
dollars was much stronger than theirs for sometime during this downturn, did
you buy some (or a lot)? Today we could only dream of being back on par with
their money. Just the simple trading of dollars back then could have got you
25-30% more compared to now. Missed opportunity, now what?
Now I’m not suggesting that when the next Greece or Detroit or where ever implodes, (as they toss their economy out the proverbial window via poor leadership and blindfolds by amassing so much debt they inevitably default and wet on the picnic baskets of their creditors that they owe huge sums to), that you should go out and sell everything you can to then buy as much of the remains as possible.
Times like this create opportunities elsewhere and opportunities create wealth.
Look at the
payments Greece missed at the end of June. How many times did you see on the news and social media hundreds of Greeks standing in front of closed banks trying to take anything they could from empty ATM’s? What happened next? Markets all over the world knee-jerked with countless scared investors taking money out of seemingly unrelated investments. (Think of the financial firemen running to the fire as others ran to the false safety of the Easter basket style investment). The Nasdaq fell more than 100 points, the Dow Jones dropped over 350 points almost immediately, but in the days that followed they were both backed up significantly. That equalled opportunity without having to buy scary investments like Greek bonds (which could very possibly be considered expensive toilet paper if/when Greece flounders again), and it could be done in markets a good distance from the fallout zone.
great but it takes timing, liquidity, foresight and some knowledge to do,
that’s where who ever it is you turn to for investment advice comes in. Ask
your investment advisor or banker some important questions like what are your
current investments in? Are they sitting in some super slumber money market
fund or its slow-witted cousin the lock-in GIC? The ones that you were
‘advised’ were both a good place to get started and then never helped since?
(FYI, both these options often don’t come close to keeping up to inflation and
thus devalue your money over time). Ask them how life and world events could
effect your portfolio. If the answer you get is ‘this shouldn’t impact you at
all,’ ask why not? Now assuming you’re not a 90 year old widow living on a very
fixed/limited income it might be time to take another look at moving even a
small portion into other options.
As previously stated your investments don’t need to be bet it all on black, crazy aggressive investments but ‘All Eggs in One Basket’ even in fortress style investments that offer less than the rate of inflation (again over time that can significantly devalue the buying power of your money -think what $100 bought you 10-20 years ago vs now), should be considered as only a portion of several different investments in your well balanced portfolio.
While you don’t have to be a Fireman running to every world fire, at the very least weigh your options, your position and your plan and seriously consider what your basket full of Easter Bunny investments are or aren’t doing for you.
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