Rob McClelland told WP that his clients’ portfolios range from 50% to 90% equities, with an average of 70%, which they rebalance daily. Therefore, his firm does not strategize around market correction.
“I am not a believer in what you can do. All the evidence I have seen in my 30 years is that market timing does not work around such events,” he said. With the rebound, anyone who had “stepped to exit” earlier in the day would have already turned capital down and triggered capital gains taxes, then found it difficult to get back and make up for the loss.
“If you were going to exit, the right time would have been the end of the year, at which time there was talk that Putin might attack Ukraine,” he said, adding that most people don’t have the stomach to go back when things really go down. Huh. Furthermore, he said history has shown that markets generally rebound and correct because “we are investing in companies that produce goods and services, and they will continue to produce those goods and services.”
“Nobody likes this stuff,” McClelland said, “and the natural reaction is to run to the exit. Usually, when you run to the exit, it’s often when you’re crushed. .Sometimes it’s better to be where you are.”
Kevin McCready, CEO and Chief Investment Officer, AGF Management Ltd., Toronto