Big Six bank's poll findings reveal concern at recent volatility, but few changes to investment holdings
As markets around the world continue on a wild ride courtesy of the coronavirus outbreak, financial advisors are broadly split into two camps: some are calling their clients to provide reassurance, while others believe doing so would cause a destabilizing effect.
The goal, at the end of the day, is to make sure no one acts rashly. And according to a new survey, there’s probably little danger of that as far as Canadian investors are concerned.
In an online survey of over 1,500 Canadian adults last week, CIBC found almost half (48%) are concerned about recent market volatility. However, a 90% majority of those who own investments said they have not made any changes to their holdings.
“Our poll findings are a positive indicator that Canadians aren't making short-term decisions about their investments based on market volatility alone,” said Laura Dottori-Attanasio, Senior Executive Vice-President, Personal and Business Banking at CIBC.
Comparing responses across provinces, the highest levels of concern over violent market swings during recent weeks were among those in Alberta (55%) and Ontario (52%). Looking at different age groups, those who were at least 55 years old were the most concerned about market fluctuations (52%), as compared to those in the 18-34 cohort (45%).
The fact that investors should avoid making emotion-based decisions bears repeating in turbulent times like this. That’s one of the lessons J.P. Morgan Asset Management offered in its recently issued Guide to Retirement, which is geared toward its advisors working with clients who are almost or currently retired.
Specifically, it noted that investors should not exit their stock positions during or after major down days. Someone investing $10,000 in the S&P 500 Total Return Index between January 3, 2000 and December 31, 2019 at a return rate of 6.06% per year would have $32,421 at the end of the period, but missing 10 of the best-performing days would cut that amount by half to roughly US$16,000; missing 20 of those days would leave them with just $10,167, and missing 30 to 60 would result in losses from 2% to 7%.
“Six of the best 10 days occurred within two weeks of the 10 worst days,” the guide said. “The best day of 2015 — August 26 — was only 2 days after the worst day — August 24.”
