Hungry gal: In addition to the point you make about investors taking on more risk than they can handle, comments on how this bear market is derailing retirement plans are due to having unrealistic expectations — double digit returns over the next 20 years, even with recent drops, aren’t very likely.

Laura: Currency fluctuations can either help or hurt returns — we don’t know which ahead of time. However, hedging costs are certain — higher fees, larger tracking errors etc. That’s why I continue to prefer to have unhedged exposure, whatever the recent performance of our currency.

Is this still your view given the drop in Canadian$ ? I’m interested as I was looking seriously at some of the Vanguard ETFs but the conversion gives me pause.

I was fortunate enough to head into cash while transferring accounts in December and May. I’ve been averaging back in– some days it feels like throwing money down into a black hole!

I’m confident (hopeful?) that some day I’ll be rewarded for buying on sale. And I’ll continue to throw any cash I can find into ETFs over the upcoming months. Talk about a leap of faith…

If you can’t recognize that things are on sale now, and hopefully getting cheaper by the day, then you really shouldn’t be in the market. Go buy a GIC and sleep at night. It is a terrific time to be buying. I plan to double or triple the size of my portfolio in the coming 6 months or so – cash is king and now’s the time to be putting it to work!

TPM: It’s a good time to be rebalancing stuff back to your target allocations. You’ll be buying low right now by selling bonds and buying equities. Ask yourself if you were investing all the money today, would you be using the same allocation %’s? If so, then why wouldn’t you rebalance your “old” money today as well?

However, I am shocked by the number of investors who are in the retirement corridor who own portfolios that are completely inappropriate for them and are now in a position of having to liquidate some of their holdings for income. I am astounded by the number of investors/planners who adjust investment portfolios to reflect their financial objectives and time horizon.

BTW – good point about ETFs with high MERs. wow. Why bother buying an ETF at that price?

Moral of the story – take an active interest in your portfolio regardless of your financial acumen. Ask questions, and demand good answers from your financial planner.

Note : I am talking long-term here… around 25 years.

It is not clear if market timing even works — there is plenty of evidence that market timers as a group fail miserably. I have no idea whether your market timer works, that’s for you to decide after taking the real costs of commissions, bid-ask spreads and taxes into account.

Comparing long-term investing results based on 1 or 3 year results is a bit like handicapping the Stanley Cup on the results of the first game of the season — it’s meaningless. The latest market turmoil has done nothing to change my expectation that the Sleepy Portfolio returning 3.5% in real terms over the long term — 20 years or more.

The market decline is very serious and inflicts significant financial pain on a great number of people. Yes this is a once in a lifetime event (I hope) but it is real and will affect the spending ability of many thousands of retirees and Canadians close to retirement for the next decade.
I hold a view which is in contrast to perhaps most of the posters on this site. I believe that always being in the market come hell or high water isn’t prudent. The S&P/TSX is down 41.5% since my timer advocated getting out of the market in mid-June. Was that a fluke call or can it be repeated? I certainly didn’t know how deep the decline was going to be but I am pleased as punch that I paid attention to the timer and put most of my RRSP in XSB.

Fred