With us heading into mid-July, the days are already getting shorter and Fall is slowly creeping closer just like that dandelion patch creeping into your gardens. With such a limited amount of nice weather and long weekends, how are investors expected to enjoy this time of year while managing their portfolio responsibly and not worrying about the markets while out on the lake? Let’s take a look at how an investor can balance both (Hint: It is easier than you think).

• Diversify your portfolio – If an investor holds a bit of every market and sector, then they do not need to be worried about what any specific market is going to do day-in and day-out. You do not need to be worried about timing the markets as while one part of a portfolio may decline, other areas should improve, helping to balance out the total return of the portfolio. Once a well-balanced allocation is held, the only thing that should really be keeping an investor away from enjoying the cottage is the fear of a broad market sell-off. The bad news is that, if you are in the markets, nothing can be done to avoid this. You could try to time the tops and bottoms but studies show time and again that market timing does not work very well over the long term. If an investor is worried about broad market selloffs, the problem may not be the markets themselves. It is more likely a sign that you are holding too much equity. 

• Option strategies – We list this one reluctantly as options are higher risk and an investor needs to ensure they understand all of the risks and issues in using put and call options. With that said, they can be an effective form of insurance against a whole portfolio or particular holdings of concern. It is important to remember that all options have some sort of cost, whether it is explicit or more implicit such as in the form of returns given up.

• Go passive – As touched on in the first point, when you hold a market index, there isn’t much you can or need to do when the whole market goes up and down. Passive investment strategies best fit the investor who wants to spend the whole year at the cottage. If you are a passive investor that feels concerned about the movements of markets, this may be another sign that you are holding too much of a certain asset given your risk and return tolerances. A close look at reducing that area and increasing another asset class may be warranted.

• Hold high quality assets in good and bad markets – It sounds so simple but so many people do not do this. Staying away from penny stocks and pre-revenue or pre-earnings companies can go a long way to add stability to a portfolio. This does not mean you cannot hold growth stocks. We cover plenty of high quality, high growth companies with no debt. Focus on companies that will continue to be around through a market downturn and are not reliant on financing to survive. A great indicator of a company’s sustainability is to look at companies EPS in the past recession. Was it stable? Did it grow or at least recover in the next year? These are the companies that will more likely survive the next downturn or flash crash that occurs while you are out fishing.

Any of the above options could be a great way to help an investor enjoy their summer without being worried about how their portfolio is doing.  You may even find our research reports and model portfolios along with the Q&A section and bi-weekly member e-mails to be enough to provide that much needed piece of mind. To many, investing can be fun and is a pastime but for those who truly want to disconnect and enjoy the outdoors, a closer look at the above points might go a long way in making the summer a bit more stress free.