How to Respond to a "Bear Market"?

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How to Respond to a "Bear Market"

To date, 2022 has been a rough ride for investors. US stocks, as measured by the S&P500, are down about 20% while Canadian stocks, as measured by the S&P/TSX Composite are down around 9%. On top of that, broad bond indexes are down around 12%. Inflation (one of the three "Wealth Killers" I discuss in Beat the Bank) is making daily life more expensive and causing the Bank of Canada to raise interest rates and many forecasters are predicting a recession. Yikes!

Here are a few things to remember:

  • Market downturns are no fun but they are normal
  • Riding the sometimes very unpleasant market rollercoaster is the price we must pay to earn good long-term returns
  • The media loves doom and gloom headlines but no one can predict the market in the short term
  • Current stock and bond prices already reflect to a significant degree the probability of recession
  • Studies show that average investors underperform the market by 4% to 5% annually for three reasons: (i) paying high fees, (ii) selling when prices are low and, (iii) buying back in when markets are high......over time that level of underperformance is crippling
  • As an investor in blue chip stocks or broad market ETFs, the vast majority of businesses you own continue to produce healthy profits today, will very likely remain profitable through the next recession (whenever it comes) and will very likely achieve record profits in the years to come
If you are a long term investor with a high quality, low cost, diversified portfolio and an asset mix suited to your time frame, objectives and risk tolerance, the best thing you can do is accept the reality of this lousy market, forget about it and get on with life with confidence that, in the long run, the market will do what it has always done…..move higher.

Four Years of Beating the Bank

Beat the Bank was published four years ago this month. I am delighted that the book has helped many thousands of Canadians invest smarter and keep more of their returns in their own pockets.

If I were to write the book today, I would barely change a word. Yes, more Canadians are investing smarter but still the vast majority end up owning high fee mutual funds and other products which produce lousy returns and result in poorer retirements.

There have been some advancements in Canadian investor protection over the past few years but the industry continues to successfully thwart attempts to (i) impose a requirement on "advisors" to act in the best interest of clients, (ii) require full fee transparency and, (iii) mandate an independent ombudsman to settle claims of harmed investors. I am pleased to serve on the Board of FAIR Canada, which fights for the rights of average investors on these issues and many others.

The three basic principles of Simply Successful Investing apply as much today as they did four years ago:
  1. Learn investment basics
  2. Think long term
  3. Minimize costs

Thanks for your support and for sharing the book with family and friends. If you have questions just reply to this email. All the best!


Investment Advice for Affluent Canadians
Some investors prefer ongoing advice. I offer full-service, ongoing investment advice and financial planning for clients with portfolios of $1 million+. My clients benefit from greatly reduced fees and portfolios which are tailored to match their personal objectives, time frame and risk tolerance. If my service might be of interest to you, just reply to this email and we can set up a call to discuss


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The Wealth Game · 155 George Street · Toronto, On M5A 2M8 · Canada


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