July 29 2008 by Ellen Roseman
In today’s Globe and Mail, you can find several experts giving advice to investors about what to do when stock prices fall.
George Vasic, strategist at UBS Securities Canada, recommends a portfolio of 12 large-cap Canadian stocks that is heavily weighted in dividend-paying issues and has substantially outperformed the S&P/TSX 60 index since its inception in 2004.
But then you read John Heinzl’s column about Dr. Doom, a U.S. analyst so pessimistic about the U.S. economy that he lives in a rented house and keeps the vast majority of his and his clients’ money outside the country, a healthy chunk of it in gold and energy stocks.
To say Peter Schiff is bearish is like saying Tiger Woods is an okay golfer, or China has a small problem with air quality.
Apart from gold and energy producers, which benefit from a plunging U.S. dollar, Schiff likes conservative, dividend-paying stocks such as pipelines and utilities. He’s especially fond of Europe, Asia, Australia and Canada, where his holdings include Barrick Gold Corp., Goldcorp Inc., Crescent Point Energy Trust, Baytex Energy Trust and Pembina Pipeline Income Fund.
You might want to sell everything you own and start over. But then you remember the calming words from Tom Bradley, former head of Phillips Hager & North mutual funds and now running his own shop, Steadyhand Investment Funds Inc.
It is not the time to bail out on your long-term plan. There may be more pain and suffering in the near term, but it will be nothing like the devastation clients experience when they make a radical shift at the wrong time (i.e. loading up on technology stocks in the late 1990s or moving into cash in 2003). When markets are extreme and volatile, it is a bad time to change direction. Your plan was put in place for just this circumstance.
So, what are you doing with your investments? Rejigging or staying put? Any tips for others as we head into what could be a long bear market?