Rough Patch

Rough Patch

While the major market indexes have been surging ahead, my own investment portfolio has been lagging. I run an unbalanced portfolio with most of my money in the Brookfield limited partnerships (BIP.UN, BEP.UN, BPY.UN and BBU.UN). Other major holdings are Open Text and Stantec (OTEX, STN). I also have a significant holding (within the realm of my own portfolio) in RWM (a US ETF that shorts the Russell 2000). I put on that short last April to hedge the long positions in my portfolio. So far it has proven to be an expensive form of insurance as I’m currently down 23.40 percent on that holding.

An important point here is that sometimes the market will move against your particular approach or rotate into sectors where you are light or have no exposure. This is part of investing and I feel it’s important to realize that it will not always be clear sailing in the markets. You will have periods of under performance.

When this happens you will often find yourself being enticed by investment ideas that you might think will help bolster your returns in the short run. The market can seem to have an insidious influence on your thinking, coaxing you to buy into investments that have not been well thought out. Actually the problem doesn’t lie in the market but within your own mind. In investing, you can be your own worst enemy. That’s why I think it’s important to have an investment philosophy that will help anchor you in times of uncertainty and stress.

When investing in the stock market its important to remember that we all face an unknowable future where anything can happen. It’s human nature to pursue the safety of certainty but when investing in the markets we have to face and deal with uncertainty. The best way to deal with that is to manage your risk and think in probabilities and not to allow yourself to get bent out of shape when things don’t go your way. It’s all part of the investing experience.