Weekend Reading: Is Stay The Course Helpful Advice Edition
Global stocks fell sharply on Thursday and Friday after US President Donald Trump’s so-called Liberation Day tariffs went into effect.
Whether the President is being deliberately obtuse about the economic upheaval these tariffs will cause, or if he’s playing chess while the rest of the world is playing checkers is anyone’s guess.
What investors want to know is whether they should do something with their own portfolios.
Once again I find my inbox and DMs flooded with messages from anxious investors:
“I am a bit confused and concerned with the US tariffs if it is still a good plan to leave the money in those ETFs (VGRO/VBAL) long-term? I just wanted to check in with you in case a change of plans might be advisable?”
and:
“Hi Robb, hope all is well amidst this madness! Any ETF tweaking needed?”
and:
“Robb, my investments are plummeting. Should I do something about this, and if so, what?”
Interestingly, a few brave investors wondered about buying the dip:
“Would this be a good time to buy some ETF’s at low prices for my non-registered account?”
and:
“With the recent market declines, do you think it makes sense to take $20-$25k from my emergency fund, put in the market now and pay myself (emergency fund) back over the next few months?”
I probably sound like a broken record when I say you shouldn’t change your investment strategy based on current market conditions (tempering those greedy or fearful emotions).
Telling my clients to stay the course while my own portfolio fell $60,000 in one day
— Robb Engen (@boomerandecho.bsky.social) 4 April 2025 at 07:13
Yes, it sucks to see your investments fall by 10% in two days. It’s tempting to do something, anything, to stop the bleeding and get to safety.
Yet we also know that while markets don’t go up in a straight line, their general trajectory is up-and-to-the-right over time. Staying invested in a properly diversified portfolio ensures that you capture those good long-term returns.
The alternative is jumping in and out of the market every time we’re faced with a scary headline. Indeed, there’s always going to be a reason to sell:
So, while “stay the course” is the correct advice, it can also seem maddeningly unhelpful. What do you mean, do nothing? Surely there’s something to do besides standing there and getting punched in the face?
First, we need to remind ourselves that our investment plan does not (or should not) expect positive double-digit returns every year. Stocks are risky if your timeframe is one day, one week, one month, one year, or even 3-5 years.
Also remind yourself that market returns in 2023 and 2024 were extraordinary. When prices are high today, we should expect future returns to be lower (and vice-versa).
If you were happy with your global equity portfolio value on August 12, 2024 – well, that’s exactly where we are today.
Finally, if you don’t know your risk tolerance, this is how you find out. Can you steel your nerves through a period of market declines? Or are you perhaps holding more equity exposure than you can stomach?
Want to hear how two of the best advisors in the business are communicating with their clients to keep them from panicking and making poor financial decisions amidst this market volatility? Listen to this excellent conversation between Michael Kitces and Carl Richards.
In the meantime, repeat after me:
I am an emotionless robot when it comes to investing.
I have a well diversified investment plan.
I will not change that plan based on current market conditions.
I will keep investing regularly according to my plan.
I’m going to put down my phone now and move on with my life.
This Week’s Recap:
My last weekend reading update reminded us why we diversify.
We filed our personal tax returns for 2024 and ended up with a refund of 20 cents. Now that’s tax optimization!
We are less than two weeks away from a trip to Italy over the Easter break. Last year I found a terrific deal on a business class flight from Calgary to Frankfurt to Florence for April 2025 so we’ve been looking forward to this trip for a while.
We’re staying in Florence for the long weekend and then taking a train to Cortona, picking up a rental car, and driving to a Tuscan villa to stay for a week. Fingers crossed for good weather, as there is an outdoor (heated) pool and a lovely patio area to relax and enjoy the Tuscan views.
We had an unfortunate change of plans for the return journey. We initially planned to return via the same route that got us there (Florence to Frankfurt to Calgary) but about a month ago we received a change notification that the Florence to Frankfurt flight got removed from the schedule.
So now we’re returning our rental car and taking the train south to Rome, staying one extra night, and flying home directly from Rome to Calgary. Not the end of the world to spend a night in the Eternal City.
Weekend Reading:
Introducing the Time of Your Life app – a calculator that will help you visualize how you will spend the rest of your life.
The 2025 paper Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice suggests that investors should hold globally diversified 100% stock portfolios for their entire lives. It has been met with intense criticism:
I’ve also written about this a few months ago in my VEQT and Chill weekend reading update.
Millionaire Teacher Andrew Hallam answers the question, should you take higher risks if you are late to investing?
“People starting late are at greatest risk of chasing past performance. They want to make up ground. But instead, they should diversify with global stocks and bonds. You never know what market is going to end up winning, so it’s best to own them all.”
A Wealth of Common Sense blogger Ben Carlson shares a short history of tariffs.
Using something called “effective number of stocks”, PWL Capital’s Justin Bender explains why XEQT is actually more diversified than VEQT:
Finally, after a college basketball star made $2M in endorsements, the internet hotly debated whether the 23-year-old was already set for life.
Have a great weekend, everyone!
Staying the course, Robb. Staying the course. Our plan is viewed through the telescope, not the microscope. Your recent review is a reassurance and a reinforcement of our plan.
Hi Robb, I had a feeling your weekend reading might be on this topic. But just because it was expected doesn’t make it any less valuable to read. We all need reminders from time to time to help us stay the course. I loved the visual of all the reasons to sell, it really helps provide some perspective. Thanks for helping us remain calm in very turbulent and anxiety producing times.
Another item to add to your list of affirmations:
It’s not a loss until I sell
This will be ultra crash number 4 for us. 2001 tech bubble, 2008 was a real kick in the teeth, of course 2020 COVID now this. Youngsters who are still working and saving just need to hang on and keep buying in. Us oldsters just need to hang on and appreciate the benefits of not being 100% equity based.
For all we know, this will be over in a month ….or not!
Said the epic Mr. Bogle:
Don’t just do something…
Stand There!
Hope everyone weathers this as emotionless robots!
We’re allowed to email you? 🙂
All I did this week was made my monthly ETF purchase early to catch the drop.
I’d also add that you lose nothing at all if you do not sell. If you have a long enough time horizon then the advice is always the same with every correction. I’d also add that I went through the 2008 crisis. For now, it was even worse.
Now is not the time to lock in losses, but assuming the “general trajectory is up-and-to-the-right over time” is a bit Pollyannaish in a late-stage bull market. We may see a rally soon, and possibly a new ATH, but those will be profit-taking opportunities.
Sure, markets generally recover, but it can take a very long time: it took 14 years for the Nasdaq to recover after the Dotcom bubble burst; the S&P 500 fared slightly better, clawing its way to break-even by 2007, only to dump again the following year in the GFC. Young investors have long time horizons for their portfolios to recover, but those in, or near, retirement don’t have the luxury of waiting a decade to get back to break even.
There’s a reason Warren Buffet took profit near the highs and is sitting on a record cash pile. He knows what’s coming over the next couple years.
Hi Garth, not to take anything away from Warren Buffett but comparing what a company like Berkshire Hathaway is doing to what the average Canadian investor should be doing is not very useful or prophetic.
Yes, it would be foolish to hold your entire portfolio in 100 tech stocks. Or even in 500 large US stocks. Lost decades can happen, for sure.
I’ve never recommended anything but a globally diversified portfolio with as much equity exposure as you can stomach. That approach, at least according to Scott Cederburg’s latest groundbreaking research, has not only survived but thrived through even the most tumultuous periods in history.
To somehow think this time is different is a mistake – yes, even for retirees.
Robb, you’re a smart guy, but putting faith in a single academic’s theory sounds like confirmation bias. Perma-Bulls and Perma-Bears can always find expert opinions to support their positions.
Getting locked into a single way of understanding market behaviour is a recipe for financial ruin. Personally, I am short-term bullish, and medium-/long-term bearish. Still, I reserve the right to change my opinion as new information and price action dictates. Nothing wrong with trimming profits at the highs and redeploying at the lows.
But for those who haven’t been paying attention, this time is different: Trump has fundamentally reshaped global commerce and the world order that has existed since 1945. It’s naive to think there won’t be lasting ramifications.
But, hey, up-and-to-the right, as always.
Garth, help me understand. You’re trimming profits at highs and redeploying at lows. That implies that you do think markets go up and to the right eventually, otherwise why redeploy at all?
Or are you simply suggesting that we should expect lower stock returns over the foreseeable future? Because that’s exactly what most experts have been saying for many years (don’t expect double-digit returns indefinitely), simply because valuations have been higher than average.
Where we disagree is what to do with this information. I’m saying, don’t do anything if you have a sensible low cost and globally diversified portfolio. Stay the course and expect lower average returns than you got for the past 10 years.
What’s the alternative – go to cash? We’ve seen over and over again that market timing doesn’t work (good luck getting the exit and re-entry point right) anywhere near as well as a buy-and-hold, or just keep buying approach.
I know it sounds naive, simplistic, even annoying to hear the stay the course advice (that’s why I wrote this!). And if you’re convinced that this time is different then there’s little I can say to change your mind.
Just take a close look at the reasons to sell chart. I’ve been having the same conversation with readers and clients for more than 15 years. It’s called recency bias and we project what’s happening right now to continue into the future.
Perhaps recency bias isn’t affecting just your readers and clients. “Up-and-to-the right” has been a familiar trope among FA’s for decades. It works great, until it doesn’t.
How many investors wished they had trimmed a bit of profit during periods of market euphoria in 2000, 2007, 2020, 2022 and 2025, then reinvested at much lower levels in the intervening years? It’s not a question of trying to time the top or the bottom, which is a fool’s errand. It’s a simple matter of protecting capital and re-investing profits. And what’s wrong with cash? HISA’s and short-term bond funds are a great place to park dry powder.
Personally, I think this is a trader’s market, not an investor’s market. I spend several hours a day studying charts, researching macro and reading perspectives from a variety of sources, including Robb Engen. I don’t adhere to any one person’s opinion because it generally doesn’t matter; the only thing that matters is price action and money flow.
So, if Trump declares “victory” and walks back the tariffs, deregulates the financial industry, cuts income taxes, and we get a Fed Put with some QE it’ll be good times, at least while the sugar rush lasts. I’ll gladly join in on that. But look under the hood and you’ll see fundamental problems. That’s why this market is rotating out of risk-on assets (tech, semis, financials, homebuilders, and consumer discretionary, etc…) and into defensives — gold, healthcare, utilities, and staples. This is flashing all the signs of being in the final innings of a 13-year bull market.
I hope you are correct and we continue “up-and-to-the right” indefinitely, even with lower returns. But my fear is Trump has put the U.S., and the world, on a recessionary path with his mad economic policies, which may well result in a significant downturn lasting many years. So yes, I do believe “this time is different” because it already is. How can anyone look south of the border and not think otherwise?
Of course, if you think this this time is no different, and it’s business as usual as Trump blows up global commerce and turns on allies, well, there’s little I can do to change your mind. Let’s just bookmark this exchange and see how it ages over the next 18 to 24 months.
Newly retired, no pensions, portfolio haemorrhaging….but we took out some cash and put it into high interest savings, stopped divvy drips on non-reg account, took advantage of the WS promotion for 30k over 24 months, and will start 1 OAS this year, one next year, one CPP the year after, and the final CPP the year after that. The 4 year ‘navigate the insanity’ plan.
Hi Kathryn, now that sounds like a sensible way to “do something” to protect your peace of mind over these next four years.
Thank you Robb for your comments, the links you provide and your reassurance, staying the course for sure! I think I’ll stop looking at my portfolio for a few days, lol.
Have a great family vacation, make some wonderful memories!
Oddly, I’ve had two opposing ideas for my own portfolio.
(1) Move from like 15% bonds to like 30% bonds or so, so that I can rebalance into equities when the crash undoubtedly hits say 20% or deeper. (Not a good idea, hard to time).
And (2) open a margin account and finally borrow from the HELOC to buy more equities (after I waited too long during the last 2 crashes).
Maybe I should just take Bogel’s advice and just stand there.
Portfolio down about $700k this past week, all I did was buy more VEQT and VFV with this years RRSP contributions made in full on Thursday and Friday. As we still have about five years in accumulation mode before retirement I welcome the price drops and slept very well this weekend. Jobs are as secure as they can be, $200k in our emergency fund, zero worries. Very confident we will see more drops as Donny Dumb Dumb will not back down. I have a big dividend coming into my corporate account this month and will immediately invest that too. No market timing just buy, hold and ignore the noise.