I wanted to share this article from Brian Levitt, an analyst with Invesco Canada. It provides an interesting picture of the markets during the last year and questions one of the “rules of investing” – buy low and sell high. He argues that it is unrealistic to buy investments when the markets are at their lows due to uncertainty and our own biases. I would tend to agree. As much as we would like to think that we make rational decisions, we often make decisions that are contrary to logic. We know markets go up and down, we know that markets go up over the long term, and we know that we should buy investments when the price is low; however, putting money into an investment when the price is low and continues to go lower with no end in sight is something that few people are able to bring themselves to do, even when they know that the price will be higher if they stay invested over the long term. Essentially, Brian is saying that today’s high will seem low with the passage of time.
This is why I think advisors are so important. We can provide perspective and help people work through their biases and fears, which can lead to better financial decisions, whether it is to buy low or buy high, because if you are not invested over the long term, you will miss out.
All the best,