Tuesday, September 15, 2015

Perspective: Staying the Course When the Market Dives

Back when I was young, dumb, and full of...energy, I often went for runs along the beautiful Rideau Canal. One summer night, while out for an easy 30 minute jog, listening to my new 64 megabite MP3 player, I ended up plastered across the hood of a car. Although I had many near misses with bikes, rollerbladers, and cars, that night was the first time I actually got hit. The car was trying to make a right turn on a red light, I assumed the driver saw me in their side mirror, and as I proceeded without much caution, BAM...I found myself sliding up toward the windshield of the car.

The S&P/TSX composite index ended Monday at 13,350. This value is about 9.5% below the starting value of the index on January 2, 2015 of 14,750, and 14% lower than the 2015 high point of 15,550.  This comes as no surprise to most Canadian investors as key sectors such as banking and energy have been hit particularly hard. Given that banking, energy, telecommunications, and REITs account for a major portion of my sector allocation, it's been a poor year for my portfolio measured from a return perspective. Even after making nine months of contributions to my portfolio and re-investing dividends, my total portfolio value is essentially flat compared to where it started 2015. Pretty underwhelming results.

However, being a dividend growth investor focused on the long-term, and considering the key metric I track is anticipated forward dividend income, the market downturn means I've been buying stock in companies at reduced prices and higher yields for the last nine months. The longer this correction or dare I say...bear market...lasts, the easier it is for me to meet my forward dividend income goals. Here's a little spoiler alert: with over three months to go, I've already surpassed my 2015 forward dividend goal! Seems like cause for celebration!

Don't get me wrong, I completely sympathize with newer investors, who see their portfolio value and net worth decrease with every stock purchase they make. To those people, my advice is simply to take advantage of this great buying opportunity. Having been through the technology bubble around the turn of the century, and the financial crisis of 2008, even though now feels like a hard time to stay the course, following your plan will be rewarding in the long-term. If you started investing in stocks without a plan, and with hopes of fast gains, this correction should serve as a wake-up call. For me, it's all about sticking to my plan, and possibly accelerating it if Mr. Market gets more depressed. 

While I was draped across the hood of the car, I did a mental check to ensure everything was still in working order. When I opened my eyes, my perspective immediately changed when I saw a young woman driver, who was absolutely devastated. I'll never forget the look of worry and shame on her face. Instead of lashing out and letting my temper get the best of me, I simply slid off the hood of the car, and very cautiously walked away after waving at the driver to let her know I was alright. When you find yourself on the hood of a car, or in a falling market, do your best to remain calm, count your blessings, and keep things in perspective. 


  1. Great advice. Take advantage of a cheaper market for a better yield to get more dividend income. As long as you pick companies that continue to pay dividends then it doesn't matter in the short term.

  2. Taking advantage of the buying opportunity has definitely helped my forward income...and hopefully yours as well. Thanks again for the comment.


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