How to recognize "too much risk."

I read this in a Morningstar publication: If you feel the losses suffered by your portfolio are too much to handle, you are probably taking on too much risk.

Or as I tell folk: If you are concerned that you may need the money you are investing in the market, don't! Only invest what you can afford to lose.

If you have followed those two pieces of advice, you will come through the present market turmoil just fine. 

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In the spirit of the above intro, over the past year I have been cashing out some investments. I have a plan, a portfolio allocation, and I was holding more of some stocks than originally planned. I sold the excess. I deposited the resulting cash in a daily interest money market account (TDB8150).

I am watching the crashing stock values with a small war chest of investment cash and a new portfolio allocation model. I am tracking the crashing stocks using a spread sheet. When the spread sheet indicates my cash will cover my dream purchases, I will buy in. Of course, it is possible the market will not dip that low and I will be left holding cash. I can live with that.

And what stocks am I watching?

• BAM.A (Brookfield Asset Management Inc.)
• QBR.B (Quebecor Inc.)
• QSR (Restaurant Brands International Inc.)
• RIF (CI Canadian REIT ETF)
• VGH (U.S. Dividend Appreciation Index ETF (CAD-hedged))
• VIDY (Vanguard FTSE Developed ex NA High Dividend)

Note: My list will not be the same as your list. For instance, there are no banks on my wish list. Why? I am fully exposed to the banking sector. The same goes for pipelines, telecoms and utilities.

I sometimes fail to follow financial advice

 I follow the Canada Income Pick List published at the first of each month by Morningstar and carried by TD WebBroker in the reports section. I own many of the suggested stocks but not all. I sold my IGM. That proved to be a good move. I also sold my Restaurant Brands International. That proved to be a very poor move.

My point? It can be very hard to follow even the very best advice when it conflicts with one's personal beliefs. With a lot of companies, I do not have strong feelings. Oh, I like Telus and have mixed feelings about Bell. I see TC Energy as a winner and CIBC as well. While ScotiaBank, in my mind, is always struggling. Still, I hold all those recommended companies in my portfolio.

But IGM and Restaurant Brands are in a league of their own. For numerous reasons, I feel very negatively about both. Investing is not just about making money. It is also about living comfortably. I could not hold either of these today and feel comfortable but I feel very comfortable NOT holding them.

If Restaurant Brands should lose enough in market price, I could see holding QBR.B at some point. As for IGM, it is out and will stay out of my portfolio for the foreseeable future.