Monday, May 10, 2010

The Importance of Staying Invested

When I looked at the financial news this morning, my first thought was: "Good thing I stayed invested in the markets."

After all, last week's deterioration of the Greece situation had hit the markets hard -- which probably drove many investors to cash out, thinking that a second bear market was coming. These investors will have lost out on this morning's jump/recovery, and are probably kicking themselves.

If I've learned one thing about investing in the last couple of years, it's that the behaviour of the markets is unpredictable. To paraphrase a famous value investor (Benjamin Graham): "Mr Market is somewhat neurotic. His moods can fluctuate anywhere between incredible optimism and overwhelming depression." And he can swing from one end to the other very quickly.

So what can one do to avoid missing out on a big boost like today's? One has to stay invested. Have a plan, and follow it.

3 comments:

MG (moneygardener) said...

Well said.

Andrew said...

Kept my kids RESP account untouched for the past three years plus added to it on a monthly basis and am now much further ahead.

"Keep calm and carry on."

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