This article is excerpted from a letter by Alain Robitaille, portfolio manager of Robitaille Group at Desjardins in Quebec, Canada.
During our annual May visit to Omaha, Marcel, Vinh and I had a very interesting discussion about the problems we face in advising our clients. Portfolio management is a challenge, managing client emotions is a tall order. It does not apply across the board, but every major market fluctuation sparks a desire to sell for some people, either for profit-taking or in an attempt to sell into a decline, with the intention of buying back in at a lower price later on. The team advisors and I often wonder about this. Reducing your equity weight if you are really concerned is not a problem; it is probably advisable. I often say that investment is not a competition. However, making the decision to sell everything is a basic mistake to avoid, for all kinds of reasons.
To give you the bottom line, as I do almost every year, I refer you to the table of results from The Dalbar Report 2018:
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Disclaimer: The results shown are before management fees. This data reflects past performance and is not indicative of future returns. This publication may contain statistical data cited from third-party sources believed to be reliable, but Desjardins Securities does not represent that any such third-party statistical information is accurate or complete, and it should not be relied on as such. Alain Robitaille and Fanie Ouellet are registered as portfolio managers with self-regulatory organizations. In accordance with Investment Industry Regulatory Organization of Canada (IIROC) Rule 1300, they are authorized to make investment decisions and provide advice on securities for managed accounts. With the exception of Alain Robitaille and Fanie Ouellet, no member of the Robitaille Group may exercise any discretionary authority with respect to a client’s account, approve discretionary orders for a managed account or participate in the formulation of investment decisions made on behalf of the holder of the managed account or advice for a managed account. Each of the Desjardins Securities advisors named on the front page of this document or at the beginning of any section of this same document hereby confirms that the recommendations and opinions expressed accurately reflect the personal opinions of the advisors with respect to the company and the securities discussed in this document, as well as any other company or security monitored by the advisor that is mentioned in this document. Desjardins Securities may have published opinions that are different from or even run counter to those expressed in this document. These opinions reflect the different perspectives, assumptions and analytical methods of the advisors who expressed them.