23 Thursday , D ecem ber 9, 2010 O A KVILLE BEA V ER w w w .o akvillebeaver .co m BusinessOakville Beaver Many of you are suffering from investorburn out. The symptoms can includefrustration, anger, fear and a high degree of anxiety. Is the anxiety understandable given the per- formance of the stock market over the last decade? Yes. If you do not put it into the proper perspective, will this anxiety hinder your future financial success? Yes. We will first look at what has happened. Then we will try to accept the past and move for- ward into the new year with a new, fresh, posi- tive attitude. The anxiety was likely caused by two factors. First, the performance of the stock market. Second, the volatility. Over the past 20, 30 and 40 years, the Canadian stock market as measured by the S&P/TSX had an annual increase of roughly eight per cent, nine per cent and 10 per cent, respectively. Those historic returns are what we have grown to expect. Over the past 10 years, however, the S&P/TSX annual return was under six per cent leaving many investors shell shocked. In 2002 and 2003 we had back-to-back loss- es of 13 per cent. That is only the second time the S&P/TSX has posted losses two years in a row over the past 50 years. To add insult to injury, in 2008 the S&P/TSX lost 33 per cent, which will have sent many investors fleeing to low yielding safe interest bearing investments. Then when you were safely out of the mar- ket, it rebounded the next year by 35 per cent. So you participated in the melt-down of your investments one year and then watched the market rebound the following year and as luck would have it, you did not participate in that gain. For many, the fun is certainly out of invest- ing in stocks. You are in an awkward predica- ment. You distrust the stock market. You are suffering through low rates on interest-bearing investments, yet you need an acceptable return on your investments if you are going to achieve your financial goals. What should you do? Our suggestion is to look at the challenge of investing from two points of view. What return do you need from your investments to be suc- cessful and how much risk, stock market uncer- tainty and volatility can you handle? Then look at what your investments are meant to accomplish. In only a few years you may choose to pay for your childrens post-sec- ondary education, while over the long term you may want investments meant to last through- out your retirement. Tend to be more conservative with funds that are needed in the short-term. If the market declines you may not have enough time for your investments to recover. For longer term investments there is less risk in owning equities because they give you the best chance of outpacing inflation. Try to have the discipline to not be too affect- ed by short-term stock market volatility. Volatility is normal and should be expected. Based on the information we have to ana- lyze, there has been a history of stock values ris- ing and falling over the past 200 years. You should only be surprised if volatility disappears. Your challenge is to determine how much risk you need to take and how much risk you can live with. In 2011 we will have several columns dedi- cated to simple, fundamental investment prin- ciples that can be followed so you have an understanding of the dos and donts of invest- ing. Next Thursday, we will look at the financial reality of Oakville. Our town has a reputation of being affluent. However, we will provide some facts and figures that illustrate how many in our town need the help of charities and how our charities need your help. Is this a time to con- sider becoming a volunteer? Submitted by Peter Watson, MBA, CFP, R.F.P., CIM, FCSI. In 1991 Peter founded Peter Watson Investments in Oakville. Peter can be reached at 905-842-2100 or visit the website at www.peterwatsoninvestments.com Dollars & Sense By Peter Watson Dont let investor burnout hinder your financial success