Here’s what financial advisers are doing (or not doing) with their own portfolios in a bear market

'I want to be buying the riskiest stuff that I can buy right now': Here's what financial advisers are doing (or not doing) with their own portfolios in a bear market

‘I want to be buying the riskiest stuff that I can buy right now’: Here’s what financial advisers are doing (or not doing) with their own portfolios in a bear market

The stock market is known for its ups and downs, where investments might see good returns before trailing off, or vice versa. The “bull market” is a market where there are increases in value of 20% or more over a minimum of two months. As expected, due to rising inflation, we are currently in a bear market, where there are value drops of over 20% on stocks.

As an investor, a bear market is a key time to consult with financial advisers and planners to find out what can be done to mitigate the effects on your portfolio.

Some advisers are also investors, who are personally affected by market shifts, and even more in tune with how to help their clients. We spoke to four advisers across North America to ask them what they’re doing with their own portfolios and what they’re telling clients.

The answers were varied but all four advisers have common lessons that any investor can use to navigate the ups and downs of the market.

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Long-term outlook

Elke Rubach, president of Rubach Wealth in Toronto, Canada. isn’t looking at her portfolio because she’s a long-term investor focusing on the next 10 to 20 years and her portfolio is “really boring.”

“I’m not high risk. I didn’t go out and buy Bitcoin to begin with,” she says. “My portfolio is diversified between [commercial and personal] real estate, insurance and funds that are already diversified, some are up some are down but it’s not money I need right now.”

Higher-risk investments

Herman Thompson Jr., a financial planner with Innovative Financial Group in Atlanta, Georgia. says he checks his portfolio when he makes a trade.

“It would be hypocritical of me to tell my clients I know what they’re invested in but I don’t know what I’m invested in.”

Thompson is continuing his strategy of dollar-cost averaging: putting a certain amount of money into the market every month. Some goes into his 401(k) or into investments. Since the markets are on sale, he’s taking a few more risks with his purchases.

“What I’ve done in my dollar cost averaging is to actually turn the volatility up. I want to be buying the riskiest stuff that I can buy right now because it’s been hurt the most.”

One of those risky funds is with an investment bank that has a mutual fund company. Thompson says this bank has “the best growth managers in the world,” and since they’re down 40% for the year, he’s buying into the fund every month.

Other than that, he’s keeping a strong cash position for his short-term investments.

Keeping things the same

Then there are advisers who lay it all out there online. Robb Engen, a fee-only financial planner and co-founder of Boomer & Echo in Alberta, Canada, recently wrote a blog post called, “How I invest my own money.”

“I wanted to show how your financial or your investment strategy shouldn’t change based on the current market conditions,” he says. “It should be something that you can stick to for the long term. In my case, what that means is that I’m not chasing what’s doing a little bit better and I’m not panicking when things are not going as well.”

Like the other advisers, his portfolio is diverse. He’s currently invested in Vanguard’s VEQT ETF, which has 13,000 stocks all across the globe bundled into one product. That way, it’s harder to see each individual stock so there’s less chance of worrying over the poorly performing ones. He’s also holding some cash in a tax-free savings account to supplement his downpayment on a new house.

Staying the course

John Sacke is an investment adviser and portfolio manager with BMO Nesbitt Burns in Toronto. He doesn’t manage his own portfolio, “I find the emotional attachment one has of one’s own money, sways your bias.”

However, Sacke makes five trades a year that make up less than 3% of his portfolio, mostly for fun.

Sacke has 85% in equities and 15% in fixed income such as bonds and preferred shares. He’s not worried about the dip in the market because history has shown that it will recover and often surpass previous earnings.

Key takeaways

When it comes to advice on dealing with bear markets, all the advisers were on the same page:

  • Don’t react emotionally and pull your money out of the market because markets move in cycles and what goes down will go back up.

  • Don’t attempt to time the market, instead, as Rubach says, “It’s time in the market, not timing the market.”

  • Understand your risk tolerance. That way, you’re not making risky purchases in your portfolio.

  • Have a diversified portfolio. That way, lower-performing assets will be balanced by better-performing ones.

  • If you’re not sure, work with an adviser. “Pick an adviser you trust and one who loves working with people,” says Sacke.

When it comes to bear markets, no one is losing sleep over it. As Sacke says, “I might look at my portfolio late at night when I can’t sleep. I’m not worried about my money, I just don’t sleep very well.”

What to read next

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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