Monday, October 7, 2013

Advantages of staying fully invested

As I stated in an previous blog, I am almost totally out of the U.S. The political game playing has made me uneasy enough to retreat from the States.

Was this a good move? Maybe. In the short term. In the long term, there are very good arguments favouring staying invested. If one is in the investment game for the long term, one must keep a long term perspective. In this view, market timing is foolish.

There is an excellent investment blog, Canadian Couch Potato, with a great post looking at market volatility with a mature, understanding, knowledgeable eye. My experience, as an investor with decades of market involvement, tells me the Canadian Couch Potato is right.

A few years ago, I dumped all my bond holdings. The yields were simply too low. I moved completely into equities and have not looked back. I am up. Way up. My dividend income is very satisfying. All that said, the day is coming when I will be moving back into bonds with the intention of getting in and staying in. The recent interest rate collapse, I believe, will prove to have been an anomaly. The classic equity/bond balanced portfolio will, in the end, be the best course of action for conservative, long-term investors like me.

One may win a few small financial skirmishes by resorting to market timing but I fear one may miss some important market advances when caught on the sidelines. It is a tough call and not one for the timid.

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