Buy low, sell high, is a common strategy preached by seasoned investors. It’s logical, rational advice - great in theory, but difficult in reality. Our emotions, not our rational minds, usually guide our investment decisions. When markets are up, our optimism clouds our judgment. When markets are down, pessimism grips our point of view.

Investment gurus tell us we should invest based on “fundamentals.” This means investors should buy stocks and bonds when they are cheap and should have a long-term horizon. However, the reality of investing is often clouded by emotion.

Regret is one of the strongest emotions hazing our judgment. After three years of declining markets, many people “WISH” they could have avoided stock based mutual funds completely. This simple wish demonstrates the power of regret. “I will hold this fund until I break even.” “I’ll sell when the market increases.” “I wish I had sold in March of 2000.” Recognize this silent enemy and remove regret from your investment decisions.

Try to imagine that all your investments were in cash right now. What would you do with your money? If you would invest the same way, your current strategy is sound. If not, you’re probably ready for a new game plan. Make sure you consider all tax implications prior to making changes.

Consider this piece of information. Investors usually bail out of stocks at the worst time - just as markets are recovering. In 1987, the US stock market “crashed” in October yet the greatest amount of money redeemed out of stock mutual funds didn’t occur until December. This selling trend continued for the next 15 months, even though the US stock market had rebounded 40% by May 1989.

These are certainly difficult times to be an investor. Yet based on historical evidence, we expect this market will eventually turn around. Stay invested and you may be rewarded for your patience.

This is a monthly article on financial planning. Call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., of Fundex Investments with your topics of interest at 798-2421 or E-mail at rick@invested-interest.ca.