Tag: long-term investment outlook

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Avoid looking at your portfolio

looking at your investment portfolio

Most people have heard of an investing tip. This often involves getting some info on a stock that is considered a “sure bet.” Other tips involve general strategies on how to invest or how to approach the markets. However, as explained by Michael Batnick of Ritholtz Wealth Management during an appearance on CNBC, there’s a very simple tip that most investors can follow that would benefit their portfolio: Don’t look at your portfolio too much. That’s it.

Short-term distractions

But Batnick’s logic is very simple. He says that the more an investor looks at their portfolio, the more likely they are to see losses, which may adversely affect their investment decision-making. And the numbers appear to back up his claims.

If you check your portfolio on a daily basis, there is a 46-percent chance of seeing negative turns. If you only check the portfolio once a month, the likelihood of a negative return goes down to 36 percent, and if you have the “hutzpah,” as Batnick puts it, to look at your portfolio only once a year, the chance of seeing a negative return goes all the way down to 26 percent.

Long-term objectives

Now, as simple as this may all seem, there are two conclusions to draw from this information. First, the amount of times you look at portfolio has nothing to do with how it performs. That should be made clear from the outset. Short-term losses happen, but they even out over the long-term. However, what this information does point out, and is the second conclusion to draw, is that the outlook one has towards an investment portfolio is crucial.

In fact, this is something that we keep stressing on these pages over and over again. Investors should not fall into the trap of listening to the day-to-day panic machine of the public markets. Markets go up. They go down. Regardless of what we do. It’s just a matter of setting long-term investing strategies that meet objectives — and sticking to them. That way, you don’t have to look at your portfolio everyday and worry needlessly.

ASCEND GRP is an asset-management firm, with offices in Toronto, Richmond Hill, and New York, that services clients seeking investment opportunities worldwide.

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A truly long-term outlook

long-term economic outlook

There is never a shortage of short-term economic an investment prognostication to be found in the popular media. In case you haven’t heard, there’s eventually going to be a recession, never mind that recessions happen from time to time.

Of course, we’ve talked about such short-term prognostications here on these pages. If you went just by what you here in the popular media, including in the financial pages, you’d think we not only would have hit a recession by now, but maybe even a depression. That’s how bad things seem to get, if you look at the short-term.

Not day-to-day, or even a year

That’s why smart investors don’t just look at the short-term and, in fact, successful investors have to look at the bigger picture, too. However, even here, much of the popular media has a focus on yearly outlooks. If you were to do a Google search right now, almost all the investment and economic outlooks are for the year 2019.

But, as a forward-looking investor, you have to look even beyond 2019. What about 2020 and beyond? If you’re going to meet your investment objectives, you have to see that far ahead and then some.

So, if you start looking that far, you get to find information that others aren’t looking at. For example, Scotiabank provides a long-term economic outlook for the Canadian and U.S. economies, and it covers the period from 2018 to 2023. Its findings shed an interesting light on what the future might hold, always keeping in mind, of course, that the future is never certain. Good investors always know that.

The next few years

Specifically, the Scotiabank report states that, although short-term economic growth in North America should be higher than potential, the long-term outlook should see things coming back into equilibrium. This indeed confirms what we’ve been saying on these pages all along; that short-term fluctuations usually get evened out over the long-term, don’t they.

In addition, the report states that the short-term uncertainty surrounding NAFTA negotiations would have no lasting effects. The report was actually written before NAFTA was successfully renegotiated, but it was prescient, wasn’t it. It actually stated that the negotiations would be successful, and it was right.

Where else have we been hearing that the world wasn’t going to end because of short-term trade negotiations? Right here, and that’s because a focus spanning years should be what investors adopt instead of a week-to-week habit of panic attacks from reading sensationalized headlines.

ASCEND GRP is an asset-management firm, with offices in Toronto, Richmond Hill, and New York, that services clients seeking investment opportunities worldwide.

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