The Markets Will Crash
We’re in the midst of one of the longest bull markets in history. Markets always adjust. We know that. One of these days, something will happen and the headlines will talk about the great stock plummet of 20XX. What’s even worse is that we have no idea when. No one does! Writing in Newsweek magazine in 1966, famous economist Paul A. Samuelson commented, “Wall Street indices predicted nine of the last five recessions!” Or as Nobel laureate Nils Bohr said, “Prediction is very difficult, especially if it’s about the future”.
What can you do to make things better?
The worst thing you can do when markets correct – and they will – is to sell everything off. This is known as “crystallizing your losses”. You will only really lose money if you sell. The default investments in you Group RRSP / TFSA – ones like Fidelity Clearpath – were built with a long time horizon, with the knowledge that markets fluctuate over time.
This shows markets over the past 50 years of investing. What we see is a constant pattern. Markets adjust, and make a big drop when they do. This is what hits the news. But every time, they’ve stayed down for only a short time, and then spent much longer in up cycles. People who have been “dollar cost averaging” – dripping a little money into their account no matter what the markets do, have spent way more time in up cycles than in down cycles.
So when a correction does happen, just remember we had this talk, take a deep breath, and know that things have always bounced back. If you haven’t started Dollar Cost Averaging yet, you can start here
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