This is the latest in a series of video interviews in which Pat McKeough will give his investment advice on a variety of topics. Some will deal with his overall investment philosophy, others on specific investment strategies and still others will be comments on events that are affecting the markets and the economy. This week, the topic is the ongoing crisis in Europe, and the apparently unsolvable problems of Greece. Is it time to take some money out of the market? On the contrary, says Pat, investors who remain calm are looking at modest risk and a lot of upward potential.
Q: Pat, a socialist president was elected in France and Greece took another turn for the worse. Is it time to be taking some money out of the stock market?
Pat McKeough: I don’t think so. I think that short-term approach in reacting to really random sort of events is apt to cost you money in the long run. Especially now—the stock market has been basically depressed for 13 years. It hasn’t really done much for 13 years.
The last time it did anything like that was in the mid-60s through the early 80s and when it finally got going it really took off. I think we’ll see something like that sometime, maybe next year, maybe five years from now. I don’t know, but I think now that we’re looking at relatively modest risk and a lot of upward potential. The thing is we don’t know when things are going to change, because there’s that random element in the stock market.
But to get back to your question: we’ve been living with these fears since last year and beyond, and people are waiting for the other shoe to drop. And that’s not the same as being surprised by a development, like the fall of Lehman Brothers, for example.
So just to answer your question then, long-time investors should hang on to a portfolio of well-established stocks that work for them with the right degree of risk for their temperament and their objectives.
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COMMENTS PLEASE
Do you get an urge to sell when the stock market falls sharply for days at a time? Did you ever get the urge to sell just before the market was set to turn around and rise? If you have sold in response to scary headlines, how long did you wait before you went back in the market? Did you buy back in at a lower or higher price? Let us know what you think in the comments section below. Click here.
Comments
jrj90620
I agree with you.You have to figure,in these days of all countries using 100% fiat currencies,that all these debts are not real money debts.Govts can and will supply whatever amount of fiat currency necessary to support their economies.We have a decades long record of fiat currencies devaluing and real assets appreciating in fiat terms.That can’t and won’t change,since govts are the biggest debtors and need continued debt devaluation.Most investors are too short term oriented and go crazy trying to figure out the short term.
The urge to sell has been present many times in the past, but seldom acted upon since I became a client of TSI.
I have sold due to scary headlines affecting a particular stock, but it was more to get rid of a position that was a loss and that wasn’t going to improve.
Going back into the market, seldom in a hurry, often shows a loss on my asset sheet because my market value is calculated to include the commisssion that has to be paid when I sell, down the road. I seldom buy a stock that I have sold, unless after a period of time, that same stock has become attractive to buy, which means it has to be less than the price at which it was sold.
While it is unsettling I have not responded by selling, after periods of a dropping market. During severe downturns I am sometimes handcuffed as to when to commit more cash to the market at the lower prices.. . . And thereby miss early gains in the turn around. I am now trying to scale into and out of the market in small increments of the positions I am working with. Having well selected, solid companies allows an individual to be confident during downturns. (Thanks Pat) Only committing long term money to the market , removes any need for a forced sale.
Learn everything you need to know in
'How to Find the Best Growth Stocks'FREE Special Report from The Successful Investor.
Canadian Growth Stocks:
CGI Group, CAE Inc., Fortis Inc. Stock and more.
Get Your FREE Report Now:
How to Find the Best Growth Stocks
X No, thanks. I don’t want to make big profits from growth stocks.
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I agree with you.You have to figure,in these days of all countries using 100% fiat currencies,that all these debts are not real money debts.Govts can and will supply whatever amount of fiat currency necessary to support their economies.We have a decades long record of fiat currencies devaluing and real assets appreciating in fiat terms.That can’t and won’t change,since govts are the biggest debtors and need continued debt devaluation.Most investors are too short term oriented and go crazy trying to figure out the short term.
The urge to sell has been present many times in the past, but seldom acted upon since I became a client of TSI.
I have sold due to scary headlines affecting a particular stock, but it was more to get rid of a position that was a loss and that wasn’t going to improve.
Going back into the market, seldom in a hurry, often shows a loss on my asset sheet because my market value is calculated to include the commisssion that has to be paid when I sell, down the road. I seldom buy a stock that I have sold, unless after a period of time, that same stock has become attractive to buy, which means it has to be less than the price at which it was sold.
While it is unsettling I have not responded by selling, after periods of a dropping market. During severe downturns I am sometimes handcuffed as to when to commit more cash to the market at the lower prices.. . . And thereby miss early gains in the turn around. I am now trying to scale into and out of the market in small increments of the positions I am working with. Having well selected, solid companies allows an individual to be confident during downturns. (Thanks Pat) Only committing long term money to the market , removes any need for a forced sale.