This week’s tanking of the TSX is reminding Canadians of the risks inherent in investing.
Aside from understanding your risk tolerance, investors should remember that most dips in the market are short-term and often caused by panic selling. If enough investors sell, it creates a herd mentality which prompts more investors to sell.
There is currently little fear among experts that the market will reach the depths plumbed during the 2008 crisis.
The current lows are attributed to global economic uncertainty regarding the U.S. debt crisis, Chinese inflation and Greece’s debt woes.
Emotion is the enemy of sound investing. For a little perspective, an email that Tridelta Financial sent to clients on Tuesday points out that $100 invested in the Toronto market in 1950 would now be worth more than $33,000.