the broken typewriter

By Brad Brain

There seems to be a strong feeling of uneasiness that has become entrenched in the outlook of some Canadians. An uncomfortable sense that things aren’t going as well as they could be. A syndrome that points to the grass being greener on the other side of the fence.

Recently I received an email from a person who owns a Group Retirement Savings Plan with another firm. She said “What’s the deal with the stock markets?  My latest statement I put in almost 1000 bucks yet my portfolio value from last month ended up down by a couple hundred….please reassure me that I’ve got them buying into the right funds.”

To which I immediately replied, “Give me a break. Put your money in, keep your money in, be happy when things go down so you can buy more shares with your $1000.”

But I was also interested in where she was coming from, so I picked up the phone and gave her a call.

I explained that I had two purposes. One was to reassure her, since she really is doing just fine. But the other thing was to explore why she felt the way she did.

I asked her what it was that is the reason for her concern. She said “It looks like I am losing money month after month after month.” See, that’s interesting to me. Because she is, in fact, not losing money month after month.

Actually she is doing quite well. But she gets one bad statement in the mail and, in an instant, all recollection of her previous impressive gains has vanished completely, replaced by the bitterness and woe associated with the most recent 90-day period.

Her impression is that she is losing money. She’s frustrated. But her impression differs from reality. She isn’t losing money.

I asked her, “What if I sent you a two-page article? Would you read that” Nope, she doesn’t have the time.

She doesn’t have the time to read two pages to become a better educated investor. She’s scared and frustrated and confused, but she doesn’t have five minutes to become better informed.

I ask her how much it is that she thinks she has lost. She figures that she has lost around 20 percent of her holdings. No wonder she is frustrated. But she is wrong, she hasn’t lost anything. It just feels to her that she has lost twenty percent. That didn’t actually happen.

Now, this an interesting part. She says “I know that in the future the markets will go up. I’m not planning on retiring anytime soon.”

Okay, so why is it that you need reassurance then?

I told her of my trip to the grocery store the previous night. Much to my pleasure, I found my favourite type of fruit & veggie juice on sale. So I bought an armload. When you get a chance to buy a quality product at a cheap price you should embrace that opportunity.

That’s the way that she should be looking at her investments. When the markets go down she should be excited, because now her monthly purchase allows her to buy even more shares in Coca Cola and Berkshire Hathaway and Disney and Apple and Royal Bank and Canadian Natural Resources and McDonalds and a couple hundred additional businesses of similar pedigree.

When prices are cheap she gets more shares for her monthly investment. She wants cheap prices to buy investments, just as I want cheap prices to buy my fruit & veggie drink.

Finally we had a breakthrough. She realized that she was looking at the wrong column on her statement.

Instead of looking at the market value, which is a temporary snapshot of what her accounts were worth at a moment in time that has already passed, she should be looking at the number of shares that she has. Even more, she should find delight in the increasing number of shares that she owns, because that is what is going to determine her eventual wealth.

The market value on her past statement is simply what her investments used to be worth. But the number of shares that she owns is her claim to participate in the growth and prosperity of a diversified collection of world-class businesses. The more shares that she acquires, the more wealth she will have. It’s as easy as that.

So let’s talk about this grass-is-greener syndrome. Are you scrapping perfectly acceptable investments that are consistent with your financial objectives because you have a vague, yet unsubstantiated, perception that you could be doing better?

Or are you taking the time to become a more educated investor? Are you taking advantage of cheap prices when opportunity presents itself and buying more shares of quality investments?

Because if you want your grass to look a little greener you are going to need to water it from time to time.

Brad Brain. CFP, R.F.P., CIM, TEP is a Certified Financial Planner in Fort St John, BC. This material is prepared for general circulation and may not reflect your individual financial circumstances. Brad can be reached at www.bradbrainfinancial.com.