Four ways to overcome ditherer’s regret

We’re going through an “if only” stage – “If only I had sold that stock last fall”…“If only I had converted more money to U.S. dollars”….“If only I had bought more bonds”…If only…well, you get the idea. I call this ditherer’s regret. We think about an investment move we should make but then start wondering if it’s the right time, if we should wait a little longer, if it’s really the best thing to do. In the end we put it off until suddenly it’s too late. The boat has sailed. So what can you do about ditherer’s regret? I have four solutions.

A lot of people are experiencing ditherer’s regret right now, wishing they had acted sooner to minimize the damage from the oil price collapse, the stock market selloff, and the loonie nosedive.

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I have two words of advice: Forget it. We can’t change the past, so there’s no point in dwelling on it. Make your decisions based on the current reality, whatever that may be. Above all, don’t adopt the “I’ll wait until it’s back to breakeven” approach. That may not happen for years, if ever.

Still, it’s important to learn from past mistakes so they aren’t repeated. If procrastination has cost you money, make some changes. Set aside a certain amount of time each day (or at least once a week) to review your portfolio and to make any changes you feel are needed. Here are four questions to ask yourself:

1. Would I buy it now?Take a close look at every stock, ETF, mutual fund, etc. you own and ask yourself if you would add more now. If the answer is no, analyze why not. If your unease relates to poor performance and/or a lack of confidence in the future, a sell order may be indicated.

2. Am I comfortable with my asset mix?Every time there’s a stock market correction, people see the value in owning a significant percentage of bonds. As we’ve seen again recently, they offer protection against falling share prices and often add value to the portfolio. It’s easy to go overboard in equities when markets are strong. But when stocks turn down, a portfolio can lose ground very quickly. Decide on a target allocation that is consistent with your goals and stick with it.

3. Do I have enough cash?As I’ve said in the past, there is nothing wrong with holding cash as long as it is for the right reason. Granted, you’ll receive an almost zero return, but you won’t have to worry about selling something at a loss to collect a RRIF payment or take advantage of a great investment bargain. There is no “right” amount of cash to hold; much depends on individual circumstances. But during times like these, it’s better to err on the high side.

4. Is there something I want to buy?Market downturns create buying opportunities, and the more extreme the selloff, the greater the values. When you can buy outstanding companies for $0.70 on the dollar, take advantage of it. The best way to do this is to keep an updated list of securities you’d like to own and review it each week. Set a target entry point for each and start to build a position when the price hits it. In some cases, you may wait a long time and perhaps never get in. But this kind of disciplined approach will maintain your focus on the best securities for your needs and prevent you from overpaying.

Courtesy Fundata Canada Inc. © 2016.Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder andThe Income Investor newsletters, available through his website. This article is not intended as personalized advice.

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