Still, I think that at current prices emerging markets and REITs are over valued. I am happy to wait for a correction before initiating a position just like I did with income trusts.

Usually, when these strategies come out and everybody is talking about them, is when it is best to hunker down because the big fall is right around the corner. And like Kevin O’Leary says on BNN, “There will be grown men weeping.”

CC: As for market timing, if you set a specific target price for an entry point on a stock, then to me that is market timing. If you have a regular monthly amount that gets invested at regular intervals, that is not market timing.

After the tech slump, I held on to my JDS Uniphase for about 3 or 4 years before selling. I thought about adding to it (on the assumption that it was now a good deal), but had just lost my job and didn’t have the funds available. Does this mean I have a strong stomach or do I still need to test myself?

With regards to leveraging, I was leveraging a lot before – but now that interest rates on my LoC has climbed to 6% and the downside risk looks much greater than upside potential in the markets right now, I am almost completely unleveraged as of today. I only have about $2K of leverage left floating around. I have been in this mostly unleveraged state since last fall.

In fact, inside my RSP account where I don’t have any leverage, my recent cash contributions to my RSP are remaining in cash or short term fixed income securities. I’m still waiting for an opportunity to deploy that cash, which currently mounts to about 25% of my RSP portfolio.

I’m currently bearish on the market, but I haven’t decided whether I’m bearish enough to short the index. The thought of sitting on a short position would probably give me sleepless nights. Cashable GICs are currently in favour for me and I’ve been pouring all my new cash into that asset class while I wait for opportunities to arise.

People that actually leveraged the good way (buying long term, based on future value of good companies) in 2001 and 2002 as the market was very low are probably laughing by now. They are now fully protected from any drop as their portfolio should worth more than 200% of their initial investment.

CC, what happen when you buy a “bargain” and it is not? I find that market timing is a much riskier game than leveraging .

As Sol Veritas said, most people already use leverage in their life for different reasons beside investment. It is just that they don’t realize it. The definition of leverage is to do more with less. That applies to several things in life. I’ll write more on that this week.

Great post!
FB.

Funny – everyone who has a mortgage fits this brush stroke nicely, although very few of them see it that way.

“A perfect storm of job loss with no job available paying at least 1/2 my current salary, my wife not being able to go back to work after mat, a big drop in the markets and a big drop in housing all at the same time could be devastating. Life is risk, but I feel more insulated than most. Therefore for my circumstances, this is appropriate.”

The people worst off from a market crash are those who are FORCED to liquidate at the market bottom, either due to margin calls or cashflow / mortgage / medical (US) reasons. A drop in housing should not affect you; ie, you’re only underwater on your mortgage if you owe more than your equity. Had you used a proper 25% down-payment with a 15-year amortization (as suggested by The Wealthy Barber), with a couple years of payments before the baby came along, you should be doing fine. It’s only the people who stretch when they’re already at the cliff who are in trouble. By this standard, housing should not be consideration on the “what’s the worst that can happen” list.

Remember – a recession is when some people lose their jobs, a depression is when you lose your job.