Need Help Desperately – Bear Markets and Having A Plan – Investor Questions

Here is what I did with my weekend! I received an email a couple of weeks back with the subject line “Need Help Desperately”. That certainly caught my attention so I did some research, went over this gentleman’s portfolio and wrote this lengthy article this weekend on the importance of having a plan in a bear market and implementing it.

This article discusses his portfolio, how I approach any bear market including the present one and show how I would structure his portfolio if it were my own. Like many investors, the collapse of the family portfolio has left this investor and his wife with sleepless nights and worries about the future and their retirement.  Remember what you read are my opinions only and not financial or trading advice. I have no financial accreditation of any kind.

Bear Markets are brutal. It does not matter who you are, bear markets don’t discriminate, they treat all investors the same. They devastate portfolios and can leave investors badly scarred. Statistics show us that many investors sell out in bear markets, usually near or at the bottom and never return to investing. Every Bear Market is always seen as “the worst one yet” with no end in sight. The media love bear markets as do many of the bear market analysts who spin hair-raising tales of depression, homelessness, bankruptcies and well, basically Armageddon itself. “End of days” kind of talk is why so many investors sell out at the bottom of a bear market because when the pain is so bad from watching their portfolio shrink, they can no longer take it. Instead that’s almost always the time to start adding to a portfolio.

Here is a condensed version of this investor’s email and questions:

Investor Questions

Hi Teddi,

To start with, I am not a member, however, been a member in the past. I have not been trading as much. Despite that, I screwed up badly, as I went too far in options on Canadian Financial stocks, namely banks. Already booked a loss of 60K. I was hoping, half of the options will expire useless, and the other half, would take assignment. We still have nearly 60K loss on the books. I have attached a copy of our holdings from RBC, as of today. Besides this, we do have another smaller account at Interactive brokers, which has all Canadian banks, and a loss of 15K or so. We do not have much of a capital gain from the past to carry these losses to previous year. We had 9K capital gain, and 15K dividend income in 2019. Would we ever be able to use this capital loss in the future?

I am 71 and my wife is 66. In summary, Very little CPP /OAS income. My wife worked part time in retail, and presently she is off due to Covid=19.

My wife is very upset, and so am I. Now we are looking for some help. My wife contacted couple of her friends and their financial planners for guidance. Each one of them want to take over the whole portfolio, and invest in funds, which do not look so great. Very small gain / income, after taking their fees into consideration.

We would like to have a balanced portfolio, 3 – 4% growth. When you got mentor, you listened, and stuck with what you learnt. Now, we need one, please guide us. Becoming a member, may not help us, as my wife does not want to trade frequently, nor wants to trade any options, unless it is to acquire some stock or write a call, and move on to another stock.

Would really appreciate any help you can provide.

Thank you kindly,

This article is for members.

  This strategy article is 4650 words and requires 11 pages if printed. It is for FullyInformed members.

Need Help Desperately – Bear Markets and Having A Plan – Investor Questions

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