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Portfolio Surveillance

How often do you review the values of your investment portfolios?  Every year?  Every quarter?  Daily?  A study was done involving the S&P 500 Index which is a broadly accepted index out of the USA that depicts the overall health of the economy.  (Source: Bloomberg - As at June 30 2018 Rolling Total Returns). The study showed the percentage of times the S&P 500 Index returns were negative over various holding periods from Jan 1, 1928 to June 30th, 2018.  Here were the results:

Holding Period (Rolling)               Percentage of Time returns were Negative

                1 day                                                                     46%

               3 months                                                             33%

               1 year                                                                   26%

                3 years                                                                 17%

                5 years                                                                 12%

                10 years                                                                7%

                15 years                                                                3%

                20 years+                                                             0%

It’s powerful to show that if an investor were to look at their portfolio values every day, they would see a negative number almost half the time (46%) and therefore would likely be unhappy almost half the time. At Kudsia Leith Sanchez we believe this could lead to bad investor behaviour. Conversely looking at one’s portfolio values once per year would show that you would have a negative rate of return experience only 1 in every 4 years.  (26%).  We believe the overall mindset of an investor is much healthier in this time-frame environment.  As you extend out the frequency with which you check your portfolio values, the chance of seeing a negative number obviously decreases more and more over time.  Be sure to space out your portfolio surveillance as it will increase the likelihood of a positive return.  Investing in equities is not something to be judged over short time-frames.  The best and safest way to generate wealth is the old-fashioned way……it needs to be earned over long periods of time.  

Please feel free to reach out to us to discuss further in detail.   

~ Paco


This publication contains opinions of the writer and may not reflect opinions of Manulife Securities Incorporated or Manulife Securities Investment Services Inc.  The information contained herein was obtained from sources believed to be reliable, but no representation, or warranty, express or implied, is made by the writer or Manulife Securities Incorporated or Manulife Securities Investment Services Inc.  or any other person as to its accuracy, completeness or correctness. This publication is not an offer to sell or a solicitation of an offer to buy any of the securities. The securities discussed in this publication may not be eligible for sale in some jurisdictions. If you are not a Canadian resident, this report should not have been delivered to you. This publication is not meant to provide legal or account advice. As each situation is different you should consult your own professional Advisors for advice based on your specific circumstances.