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Avoid emotional financial investments

By Brock Melnyk, Senior Financial Advisor 12 March 2019 4 min read

Control the controllable.

When it comes to investing, one of the most important pieces of advice I can give my clients is to focus on controlling the things that we can actually control. We can control factors like cost, the mix of assets in your portfolio, our behavior and how much we focus on ‘the noise’ out there in the marketplace. We obviously can’t control factors like the economy, day to day movements in the markets, interest rates and other things that might impact our investments like politics or mother nature.


Ignoring the noise.

When I refer to ‘the noise’, I’m talking about getting caught up in whatever stock is the darling of the time. There are always certain products that seem to boom in popularity. They seem profitable, but in many cases they are risky and more of a fad than a reliable place to put your hard earned money. You can look at historic examples like Bre-X or any company ending in dot-com during the tech crisis. Maybe today’s fad is Bitcoin or the next new social media darling, only time can tell. It’s also important to detach yourself from a stock or product that is underperforming, even if you personally like it. 

For example, I have a long-term client that liked a particular equity. He had a lot of this stock about 6 years ago and wanted to continue to buy the stock because it had a profitable run. This company was considered a ‘hot stock’ at the time. I recommended we sell the stock in 2011 when it was priced at $64.72. As of April 2017 it had plummeted to $10.90. That is an 83.15 percent decrease since I recommended to sell. My client was saved from a major financial hit. Now, this stock actually has had a slight increase recently, but if stock drops 80 percent, and then subsequently regains 80 percent, you need to remember you are still down 74 percent overall! Below is a copy of a photo I emailed to my client (name of stock and client removed) right after he tweeted to me that he wanted to buy the stock again this year. Through the power of this image, he was reminded of what happens when you listen to the noise too much and tie up your emotions in investing. We have a really good relationship and often joke back and forth about “hot stock tips”. You never truly know when a stock may drop again. Not being able to manage these ups and downs loses investors a lot of money. While hindsight is 20/20, no advisor has a crystal ball.

The key to investing success is to ignore the noise, detach yourself from these hot stocks, trust the counsel of your financial advisor and stick to the steady plan that will help you reach your financial goals.

Expert advice you can trust.

Your average Albertan is not watching BNN every day to see what is happening on the market. It’s my job to watch the markets so that when a client calls about a certain booming product they heard about around the water cooler, I can consider how it will affect their financial plan and give them counsel on it. 

You hire experts to do things you’re not an expert at. When you hire a financial advisor, you are hiring an expert to manage your retirement savings plan. I am not an expert at electrical work, so when I need some wiring done around the house, I’m going to call in a certified electrician. Not only is it safer to do so, I know that person is more qualified to do the job properly and I’ll get far better results than if I tried to do it myself. In the same way, hiring a financial advisor will ensure your investments are professionally managed so you can meet your financial goals and dreams. 

 That same client who wanted to keep that particular stock has trusted my advice and has allowed me to help them build a successful investment plan. They have a stable, diversified and predictable portfolio that has made them a lot of money over time. In fact, since they started investing with us in 2003, their portfolio performance has exceeded their expectations, while also surviving the worst recession in 70 years.

The key is to build a portfolio that isn’t full of things that will set you back. You want to be able to predict where you are going instead of chasing emotional hot-off-the-market stocks. Hiring a trustworthy financial advisor can help with that.


Long-term, personal service is a key factor to your success.

In our industry, you need the consistency that comes with dealing with the same financial advisor over the years. ATB Wealth has a proven reputation for low turnover among employees and is known in the industry as one of the hardest places to get a job. This allows us to get to know our clients and build up a relationship of trust over that time. 

When it comes to my clients, I know their names, their life situation as well as their long-term financial goals. When choosing a financial advisor, you should ask how many clients they service. You would be surprised to learn that some bank’s advisors are investing for 1000 people or more. How can they manage the emotions of investing for so many clients? You need to know that you will be properly serviced. 

Have questions? Get in touch with an ATB financial advisor in your neighbourhood.

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