Market volatility 3 rules

1- Worried about tumbling stock markets? Avoid hasty decisions.

Sharp fluctuations in the stock marketsAn exchange, such as a stock exchange, is a market where investors can buy and sell securities, including shares and options.
In order for a company to be listed on an exchange, it must meet certain criteria and regulations, relating to accounting practices and information for shareholders, for example.  often make the news. Like some investors, you might be afraid of losing a large portion of your savings and may be tempted to adopt new investment strategies.

Don’t make hasty decisions. The consequences could be serious. Instead, consult the table showing past bear markets and subsequent recoveries in Canada based on the S&P/TSX Composite Index.

2- Keep a clear head

Choose investments that are aligned with your financial objectivesThe financial objectives of a person or company are the financial results they would like to achieve by applying a strategy and an action plan. . Don’t make a radical change in your investment strategy simply because the markets have taken a nosedive.

Remember though to revise your strategy if your goals or your financial situation changes.

Ask an authorized representative for help. Discuss your situation with your representative and ask questions.

Whether the markets are up or down, follow these 3 advices.

  1. Stay calm. Panic or euphoria can lead to poor decisions.
  2. Choose your investments in relation to your financial objectives, risk tolerance and investor profile.
  3. Consider diversifying your portfolioA portfolio is a group of various investments made by a person or a company.
    For example, an investor’s portfolio can contain shares, bonds, mutual funds, options and other financial instruments.      based on your situation. By diversifying your investments, poor performances might be offset by solid returns generated by other investments.

3- Do not fall into the trap of a fraudster

Many fraudsters use the fears and nervousness of investors to tout the merits of questionable investments. They approach investors to offer them so-called high-yield investments that they say will protect them against market downturns.

If you are the target of such an offer, do not hesitate to contact the AMF.

Insight

Some tips to avoid fraud

  • Check that the person and firm are authorized to offer you the investment.
  • Beware, if you are offered returns that seem interesting and supposedly risk free. Generally, the higher the expected return, the greater the risk. When it's too good to be true, it’s likely a fraud.
  • Beware of pressure selling, think twice before you invest;
  • Require a prospectusA prospectus is a detailed information document that a company must prepare to be able to sell securities (such as shares) to the public.
    It must provide full, true and plain disclosure of all material facts likely to affect the value or market price of the security in question.       to learn about the characteristics and risks of the investment. If the person can’t seem to provide you with a prospectus or delays in doing so, do not invest.
End of the insight

Documentation and tools