Canadian make mistakes with money

http://www.renaissanceadvisor.ca/5173/LandingPage.aspx?id=265351&lm=12804421&q=82197849&qz=9e9ae697dfc6e2d61a1e3189407548fa

August / 04 / 2008
$45 Billion stashed under the mattress?
Today’s volatile markets have triggered a widespread "flight" impulse – with many Canadians electing to cash-in and cut their losses, rather than wait it out. In fact, a recent CIBC World Markets consumer watch report revealed that Canadian investors have at least $45 billion stashed under the proverbial mattress.
These record-high cash holdings are a sign that emotions are overriding fundamental investment wisdom. We believe that, by exposing critical flaws in this short-sighted strategy, you can strengthen ties with your clients and generate new business opportunities. Here are some key concepts to discuss with them:
Lessons from history
The market has proven its long-term resilience by rebounding time and again from economic turmoil, wars, natural disasters and political unrest. By staying out of the market, clients may miss out on crucial growth opportunities that arise when the market invariably rises again.
Benjamin Tal, senior economist at CIBC World Markets, urges investors to look at the big picture. By his calculations, sitting too long on the sidelines after the 2001 market correction cost Canadians more than $30 billion – and it looks like history may repeat itself in 2008. Says Tal, "Investors could sacrifice billions of dollars in potential investment gains."
Professional investment advice
Now more than ever, it’s important to remind your clients that they have an invaluable resource to draw upon: You. Schedule a meeting to review their investment objectives and risk profile, and discuss how their portfolio is designed to help them meet it effectively. This can also be an ideal opportunity to discuss client assets that may not currently be under your administration, and the advantages of making them part of a more cohesive investment strategy.
Reassure your clients that the key elements of their portfolio—such as diversification and professional portfolio management—are based on "tried and true" investment principles that have prevailed throughout many decades of market ups and downs. Let them know that, unless their personal objectives or risk profile have materially changed, periods of volatility are the worst time to crystallize capital losses and abandon their investment strategy.
Professional portfolio management
For the astute investor, volatility can actually translate into opportunity. Renaissance Global Markets Fund Portfolio Manager David Winters views periods of market volatility as an opportunity to uncover exciting investment bargains. "It’s like the after-Christmas sale", quips Winters, "you want to buy something of quality at a big discount."
Like many professional portfolio managers, Winters believes that unsteady market conditions are ripe for investing. Explain to your clients that, over the long term, dips in the market are excellent opportunities to buy quality assets at a lower price. At times like this, professional portfolio managers will act on savvy insights that can help investors get further ahead in the long run.
Entering the market—without timing it
If clients have a considerable amount of cash on the sidelines and are afraid to commit it to the market, you may wish to discuss a dollar cost averaging strategy with them.
The principle is the same as with a pre-authorized contribution (PAC) plan. For example, you might suggest investing a fixed amount of their parked cash in the market each month throughout the year. That way, they can enter the market without the risks of market timing.
In months when the market is up, the client will be buying at a premium. In months when the market is down, the client will be buying at a discount. However, once all the money has been invested, the client’s average cost of entry to the market is likely to be somewhere in the middle—a much more prudent strategy than trying to time the market.
For more facts and historical perspectives to help you steer your clients’ parked funds backs into the market, ask your Renaissance Investments sales representative about these recent publications:
A Time for Rational Thinking
Long-term Growth Prevails
For Advisor Use Only. This material was prepared for investment professionals only and is not for public distribution. It is for informational purposes only and is not intended to convey investment, legal or tax advice. The information contained in this document has been obtained from sources believed to be reliable and is believed to be accurate at time of publishing, but we do not represent that it is accurate or complete and should not be relied upon as such. This material and/or its contents may not be reproduced or distributed without the express written consent of Renaissance Investments. Renaissance Investments is offered by CIBC Asset Management Inc. ™ Renaissance Investments and "invest well.live better." are trademarks of CIBC Asset Management Inc.

Mike Sweeten Director, Regional Sales(866) 621-6699michael.sweeten@cibc.ca
Christopher DuboisManager, Business Development(866) 695-0958christopher.dubois@cibc.ca
Josilynn ThiessenSenior Sales Assistant(866) 578-0282josilynn.thiessen@cibc.ca
Privacy Renaissance Investments web site Contact us Unsubscribe Forward to a Colleague
For Advisor Use Only. This material was prepared for investment professionals only and is not for public distribution. It is for informational purposes only and is not intended to convey investment, legal or tax advice. This material and/or its contents may not be reproduced or distributed without the express written consent of Renaissance Investments. Renaissance Investments is offered by CIBC Asset Management Inc. TM Renaissance Investments and "invest well.live better." are trademarks of CIBC Asset Management Inc.
This email was created and delivered using Advisor Mailout