For my kin: Volatility, Risk and Marketing

I'm going to post two images. Both show five funds I am following. The first was a screen grab from a few days ago. The second is a screen grab from today, after a sizable drop in the market.

All five funds started with an initial deposit of $10,000. And all have gained value since being opened. But note what two days of crashing market values have done to each fund.

The TD Comfort Aggressive Growth Portfolio - I is marketed as a fund with great growth potential. How a fund can by both aggressively seeking growth stocks while providing comfort is beyond me. Aggressive growth means risk and risk does NOT mean comfort. And if it can go up smartly, it can come down equally quickly. And it did. In the past two days it lost 26.5% of all its gains.

The TD Dividend Growth - D series holds a lot of solid, dividend paying stocks. It is not a great mix but it does aim for good quality. It can be volatile but still it only lost 14.8% of its accumulated gains.

The TD Dividend Growth - I series charges less MER and so collected more gains. The drop affected both the D-series and the I-series similarly but because the I-series had a smaller gain, the percentage of the gain lost was a little greater. It lost 16.7% of all its gains.

The TD Monthly Income is one of my favourite funds. It doesn't set the world on fire when the market is hot but it doesn't fall through the floor when the bottom falls out of the market. You can expect to lose a lot but this will be a lot less than many other funds. In the past two days it has only lost 10.75% of its gains. One can still sleep at night.

And lastly, the Retirement Portfolio is proving to be a dog. It only had a meager $527.36 in gains and yet it lost 27.65% of these in just two days. Its gains dropped to $381.50.

Before I let you go, note the final value of each fund. This is the Market Value column second from the left.

The two dividend funds are in the lead with the Monthly Income fund in third place. The TD Comfort Aggressive Growth Portfolio has dropped well back and is now in fourth place. The fifth place fund, the Retirement Portfolio, is not yet in the red but it is looking like it could be a big loser in a bear market. And this is what the bank sells retirees? Huh?

One last add: I talk a good line but I hate too much volatility. I can handle the ups but the downs kill me. I begin to panic when I lose more than 40% of my investment. For this reason, I try to buy safe stuff - like utilities. Banks can be good in that they almost never cut the dividend. If it is the dividend you need, then up market or down market, your day will unfold as it should.

I'm embarrassed to admit it, but along with my stocks, I own TD Monthly Income. I mix it owning it with a lot of pure equity plays. The TD Monthly Income, with all the bonds it holds, softens the landing when my portfolio crashes.

As you may have already surmised from the above two images, if one mixed the TD Monthly Income - D series with a carefully selected amount of the TD Dividend Growth - D series you keep your risk manageable, increase your gains when times are good, get a fair dividend to help tide you over during down times and keep the worst bears away from your financial door. You shouldn't lose more than 25% in a crash  -- with a little luck, probably a lot less. This is better than losing 50%. Honest.

Cheers,
Ken