Throughout the past decade, investors have enjoyed a bull market, as technological innovation, low interest rates and government stimulus have driven stocks to record highs. However, like all other bull runs in market history, at some point, this upward momentum is bound to come to an end.
While no one can predict when this inevitable bear market will occur, that does not mean it’s too soon for investors to start protecting their portfolios from its potential impacts. To learn more about how investors can prepare their portfolios for the next market downturn, the Financial Post turned to Sightline Wealth Management for insight.
“What’s key is limiting the risks while aiming to provide absolute returns, so whether it’s a bull or bear market, your portfolio still generates a return,” says Sightline Wealth Management Senior Vice President and Investment Advisor Paul de Sousa.
When investors are well-prepared for a bear market, instead of becoming gripped with fear and selling their investments amid falling prices, they instead see the opportunity to buy.
“It’s an oft-used cliché, but if you are looking to invest in excellent companies, the time to buy is when they’re on sale,” de Sousa tells the publication. “A bear market presents that opportunity, but it takes a lot of intestinal fortitude and often nudging from an advisor to invest when prices are low.”
It is important to note that mitigating bear market risks while also taking advantage of their potential opportunities is often easier said than done. As a result, professional investment advice can be a valuable resource when attempting to navigate these complicated waters.
“An advisor has many roles, but among the most important is handling investors’ emotions so they avoid doing the wrong thing at the wrong time,” de Sousa explains. “Rather than being reactive, we help them build portfolios that are proactive.”
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