This month’s version of The-World-Is-Coming-To-An-End, the US debt crisis, has come and gone with the (less than shocking) passing of a bill to raise the debt ceiling.
And yet the markets continue to struggle.
With the TSX now back to the level it was at last November, it seems inevitable that investors will be getting frustrated and losing confidence. Despite the fact that these are the best times to be buying stocks, it is not at all surprising that most investors are doing the exact opposite – running for the hills.
Even though all of the available evidence shows that the best path to success is to stay invested, doing so when sentiment is low and the media is screaming Armageddon (are they ever not doing that?), is not an easy task.
That is one of the added benefits of dollar-cost-averaging. Not only is regular saving a sure fire way to financial security, but to do so on a monthly basis results in being able to dollar-cost-average, which all but guarantees that you outperform the market. The added benefit is that it so clearly illustrates for investors how dips in securities prices are actually a gift to long-term investors (at least to those who are regularly saving). The result is that it helps relieve the stress of market dips, which leads to the confidence to stay the course, which in turn leads to financial success.
But as one of our clients likes to say: if every grain made it to the grainery, any idiot could be a farmer.