How to ride out market volatility

How to ride out market volatility

First Published: ADawnJournal.com Aug 7, 2008

Unless you are living under a rock these days, you're concerned about the recent market turmoil. Investors all over the world have been losing chunks of their portfolios every day. I remember that I stopped looking at my portfolio at some point and since then I have been checking it very infrequently. Poll after poll shows that the majority of investors are pessimistic about the future and they are making changes in their portfolios based on emotion and fear, not based on a calculated decision.

The most common action they are taking? Switching out of equities and parking money into money market products. Equities are at their lowest at this time and switching out of equities may cost you a lot more than you can possibly handle. It is never recommended to get rid of equities when they are at a heavy loss. Now, naturally, you are going to ask, "If we're not to get rid of equities, what could we do to ride out market volatility?" My number one suggestion would be: do nothing. Yes, indeed – do nothing. Just sit back, relax, fasten your seatbelt, and ride out the market volatility.

If you are not convinced yet, consider the following points:

• Diversification is the key to achieving stable returns throughout the good and bad times. A well-diversified portfolio should not fluctuate to the same degree as stock markets.
• Volatility is a normal part of investing. There will always be ups and downs in the market. Do not let market volatility divert your focus away from your goal. Stay invested, keep adding more money, and you will be fine in the long run.
• Investment is a discipline. Do not make decisions based on emotions. Research has shown that the stock market has averaged an annual 11% rate of return over the last 120 years. Stay invested for the long run – through good and bad times.

I would like to end today's article with a quote by legendary investor John Templeton. John Templeton recently died at the age of 95. He was famous for this quote: "Buy at the point of maximum pessimism." Templeton's quote makes perfect sense—whenever there were declines in the market, the market eventually recovered with greater gains. Investors who acted emotionally lost the most. That's why my advice is: Do Nothing. The market will recover and you will be in good shape again. Just be patient and ride out the volatility.

Beta And Standard Deviation

Beta and Standard Deviation

Today I am going to discuss Beta and Standard Deviation in terms of mutual funds and stocks. Both are statistical terms, but they take a whole new meaning when you put them into investment perspective. I am discussing these in bulleted lists to make it simple and easy to understand.

Beta

• Beta is a statistical term that shows volatility with respect to the market or index as a whole.

• Beta does not measure a product’s unique volatility.

• Beta measures volatility based on the whole market.

• Higher beta means greater volatility.

• A product with beta 1 means it moves with the market. A product with beta 0 means it does not move with the market, e.g., cash.

• A product with beta more than 1 moves ahead of the market, and thus translates into greater volatility than the whole market or index.

• A product with beta less than 1 moves less than the market, and thus translates into lesser volatility than the whole market or index.

Standard Deviation

• Standard Deviation is a statistical term that shows volatility.

• It measures the range of performance.

• It shows how widely performances (or returns or values) are dispersed from the average.

• The greater the standard deviation , the greater the volatility.

• A volatile product is considered a high risk product.

First Published: June 27, 2008 ADawnJournal.com

Free Credit Monitoring for Canadians

Credit Monitoring After Equifax Data Breach

Credit monitoring should a part of your routine to protect your information and stay safe, especially after the Equifax data breach. The good news is there are 2 financial services companies who are already providing this for Canadians for free.

Credit Karma provides a free TransUnion credit score for Canadians and recently this financial services provider started providing free credit monitoring. When important changes happen on your TransUnion credit report, such as an address change, a hard inquiry, or opening a new account, Credit Karma will notify you via email.

Another financial services provider, Mogo.ca, recently mentioned that they are working on a new alert feature on Equifax credit score that will let its members know when a new inquiry occurs. Mogo already provides a free Equifax credit score for its members. However, it is not clear from the email I received from Mogo whether this feature is currently active or if they are still working on it.

Use all the tools and features to keep an eye on your credit files and take steps to protect yourself should someone try to use your information fraudulently. I regularly publish brief videos of this nature, so to keep updated subscribe to my YouTube channel here: www.youtube.com/adawn. Also, I have a video on the same article you just read and you can watch this here: Free Credit Monitoring After Equifax Data Breach

Invest Now Hits Chapters Indigo Bookshelves

The Wait Is Over - Invest Now Is Available

First Published: June 20, 2008 ADawnJournal.com

I am writing this post to let all A Dawn Journal readers know that Invest Now has hit Chapters Indigo bookshelves. Invest Now is initially available at -

Chapters - Queensway
1950 The Queensway
Etobicoke, Ontario
M9C 5H5 Canada
(416)622-2838

Later on, Invest Now will be placed in additional locations.  Invest Now is also available at these fine online shops: Amazon.ca, Chapters.indigo.ca, Barnesandnoble.com.  Invest Now delivers a convincing case for avoiding daily spending temptations and then shows you the secrets to smart investing. With as little as $25, you can become a successful investor by following three simple and practical steps.

The must-have guide for Canadian investors, Invest Now delivers three surprisingly simple steps to safeguard your financial future.

You don’t have to be a financial guru to develop a consistent savings plan and accumulate wealth. Invest Now offers all the tools and motivation you need to start building a safe and secure financial future now for you and your family. Invest Now has won prestigious Editor’s Choice and highly prestigious Publisher’s Choice award for its editorial integrity and outstanding design quality.

NB: To view more pictures, please visit A Dawn Journal Flickr page

Award-winning Invest Now covers a broad range of topics including Internet Scams. To purchase a copy, visit Chapters Indigo or click here to buy online - Invest Now: A Canadian's Guide to Investing

The Internet Habits of Personal Finance Bloggers - Get Rich Slowly

J.D. Roth - Get Rich Slowly

On April 30, 2007, I wrote an article on Web 2.0. The web has evolved so much that it is an indispensable part of our life, and we don't use the web the same way it used to be. Professional Internet users, such as bloggers, or any others who depend on the Web for a living, use the Internet differently than average users. I thought it would be helpful for my readers to know how a professional, such as Get Rich Slowly's author J. D., uses the Internet on a daily basis. Here is what J. D. provided for A D Journal readers.

A Day in the Life of a Blogger

I am an internet junkie. I have been addicted to the net since 1994 - and earlier if you count USENET newsgroups and the bulletin boards of the 1980s. I've always craved a connection with other people, the mad exchange of ideas that interconnectivity allows.

Since I began blogging full-time this March, it's become painfully apparent just how much time I spend online.

The first thing I do when I wake up in the morning is roll to the edge of the bed and grab my MacBook Pro from the floor. While I grog awake, I make a quick pass to verify that Get Rich Slowly hasn't imploded. (It never has!) I also tabulate statistics from the day before, entering them into an Excel spreadsheet.

After I get out of bed, I spend half an hour in Apple Mail, processing the most urgent messages. I used to reply to every piece of mail I received, but that's physically impossible now. It bothers me that I have so many unanswered messages in my mailbox, but there's nothing I can do about it.

After breakfast and after exercise, I spend time gathering information in my web browser (Safari) and composing articles in my text editor (BBEdit). This generally takes several hours of my day, during which I'm also on iChat with other bloggers and friends.

I also try to make time to visit other personal finance sites, especially blogs. I used to read everything via RSS feed, but like my e-mail, this has become unmanageable. I've abandoned my feed reader (NetNewsWire) and now read blogs the old-fashioned way: via the web. But this means I don't catch new stories as soon as I once did. Sometimes I miss great stories completely.

I try to wind down my heavy internet use by about mid-afternoon so that I can spend time with my wife when she gets home. Still, I check in on the site every hour or two to make sure things are okay. And then before bed, I show Kris the preliminary numbers for the day.

All told, I spend about 70 hours a week online. According to the marvelous utility RescueTime, I spend about three hours on my computer every Saturday, about five hours each on Friday and Sunday, and then about 14 hours a day Monday through Thursday.

Of this, about 12 hours a week is spent in BBEdit, performing that physical act of writing. About ten hours is spent at Get Rich Slowly performing a variety of blog-related tasks. I spend nearly eight hours a week processing e-mail — and remember, that's just handling the barest essentials. Finally, I spend about three hours every week fussing with Excel. Those four tasks take 33 hours of my time every week, and that doesn't include research for various articles.

I'm not happy with how much time I spend online. Tracking my habits with RescueTime is the first step in determining methods to reduce the madness. My goal is to become more efficient, to become less wired. My goal is to spend more time in real life again!

First Published: ADawnJournal.com Jun 13, 2008