Should You Worry When Stocks Hit An All-Time High?


Many investors are scared by the recent market turmoil. 

Have the smart investors jumped out of the market?

 Image by Pixabay

Read the article at AssetBuilder

Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School and Millionaire Expat: How To Build Wealth Living Overseas. My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions.

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19 Responses

  1. Lucas says:

    Andrew, first of all let me thank you for writing the Millionaire Teacher book, which really opened my eyes to investments. I was previously attracted by offers from mutual funds, though have not committed myself to any long term plan with exorbitant fees. Well, but I was close…

    One day after buying your book I got a cold call from a local financial advisor and was heavily influenced to subscribe to a Zurich Vista package 🙂 While I have not read the entire book by then, at least I was cautious which has certainly saved me a lot of grey hair and money.

    However, straight to your question, I feel that there is still some more pain coming, though I have just set up the OCBC trading account in Singapore and will start bying the index funds within the next 2 weeks and add periodically. Given the current turmoil, I will start with bonds and add the stock index funds later. What concerns me is that the STI has not really advanced over the last 5 years so I am not sure if this is really the right index fund to stick to unless it drops another 10-20%. However, I am still in late 30’s so I still hope to see new highs…

    When it comes to US, investing now seems to be early, though based on your good advice, I will at least invest in index funds which carry a low maintenance cost – big thank you!


    • Hi Lucas,

      You are asking me questions that are speculative in nature. I just build a portfolio based on a specific allocation of stock and bond market index funds. I choose to purchase more, every month. I select the index based on my allocation. I ask myself, “Does each index now represent more or less than my original goal allocation?” If one of the indexes is below my goal allocation, then my month’s savings goes into that index. If my regular purchases can’t keep my portfolio aligned, I sell some bonds to rebalance. If the markets keep dropping (as I mentioned in my book) I simply do that again. I never use forecasts or guesswork.


  2. Jason says:


    I had a question about borrowing on margin. What are the pros and cons of borrowing on margin to buy low cost index funds like VUN?

    • Jason,

      I don’t believe there are benefits to ever buying on margin. It’s much like a a deal with the devil–one that gets more addictive if you find initial success.


  3. Shawn says:


    After reading through Millionaire Teacher, I decided to start investing using the index / bond strategy outlined in the book. However, I am still lost as to where I should go to make purchases of said bonds and indexes. Who would you recommend I work with being a person who lives in Canada?

    • Hi Shawn,

      If your bank account is with RBC, I suggest using RBC Action Direct. They’re quite good. I also like QTrade, CIBC’s Investor’s Edge and TD Waterhouse. There are others, of course, but they all do the same thing: allow you to buy ETFs off their respective platforms.

      If you don’t want to invest on your own, I recommend Wealthbar.


  4. Jen says:

    Hi Andrew

    I have a balanced portfolio of Etfs 40/60-bond/stock and a m not concerned whether the market is currently up or down as I am leaving my money to grow over 10 yrs. However, in my perhaps ignorance, I always thought when equities were down bonds were up-but I see now both my stocks and bonds are low-in fact my bonds -global-have consistently this year made big losses and the stocks gone up and down? Just asking for some information so I understand better.

  5. edel says:

    Hi Andrew,

    just finished reading your book and thought it was brilliant thanks!
    I do have a question though- have you ever heard of investment trusts in the UK? I’m 27 and thinking of longterm investing and looking at popular ITs versus trackers they do seem to outperform. Also they have lower fees than funds. I’m quite tempted to invest in ones like sec, smt, fgt and hdiv for bonds- what are your thoughts on ITs? Would you still think them too high cost and suggest going for trackers instead?
    Many Thanks

    • Hi Edel,

      Unit trusts are actively managed–and trackers are cheaper. It’s easy to see which unit trusts have beaten the market in the past. But finding future winners is next to impossible. Stick to portfolios of tracker funds for the best odds of success.


  6. Sander says:

    Some -including Jeremy Siegel- predict bonds will not achieve the real returns they have in the past now that interest rates are at post WWII lows and economic growth is slowing. Siegel also predicts the negative correlations seen in the past may not persist. Yes, that’s speculation but so is the assumption bonds will continue to move in opposite direction of stocks. Siegel presents data that suggests stocks are less risky over the long term than bonds. If the real returns on bonds near interest rates on cash then the latter might be better diversifier. Time will tell.

    • Predicted returns aren’t that relevant, nor are isolated returns always the bee knees. For example, bonds have easily beaten gold over the past 100 years. But when examining something like the Permanent Portfolio returns (split evenly between bonds, gold, stocks and cash) we can see that isolated returns aren’t that relevant. The portfolio nearly matched the return of stocks since 1971 (despite having gold and cash, which both performed poorly in isolation). What becomes relevant is the annual rebalancing and the fact that asset classes often move in opposite directions. So buying the dropping asset class allows us to increase stability, and sometimes, increase returns.

      As an isolated entity, stocks aren’t risky because they have almost always beaten inflation over multi-decade measuring periods. The biggest risk is not beating inflation. But the multi-asset class portfolio can certainly smooth returns, for those who fear volatility.

  7. Pete says:

    Hi All,

    I have received fantastic advice here in the past and am now a committed passive investor with a Saxo account running. I do however have an Old Mutual (formerly Royal Skandia) 5 year Executive Bond.

    It is currently in expensive Mutual Funds and has performed poorly. I would prefer to keep it going and not pay penalties. I currently pay around 3% a year in fees, but after 5 years it drops to below 1%.

    I have asked my advisor to sell the current funds and recommend only ETF’s for me. He has come back with this suggestion. It looks decent, although some of the ETF’s are on the NYSE. My plan is to move into these ETF’s and then pull them out when the 5 years is up and put it in my Saxo account.

    BlackRock Fund Advisors MSCI EAFE Index – 25%
    Invesco PowerShares S&P 500 Low Volatility – 20%
    BlackRock Fund Advisors iBoxx USD Investment Grade Corporate Bond – 15%
    Invesco PowerShares Capital Ma 1-30 Laddered Treasury Portfolio – 15%
    BlackRock Fund Advisors Morningstar Mid Value Index – 10%
    DB Platinum Advisors ETF MSCI World Information Technology Index – 10%
    Vanguard REIT – 5%

    Any thoughts would be welcome.


    • Hi Pete,

      This looks fine, but skip the world information tech index. No need for that one.

      I’m glad you are going to move this money out in 5 years time. Your total costs, after that point, will almost surely be higher than 1%, including fund charges. Glad to hear you will move it.


  8. Pete says:

    Hi Andrew,

    Your advice and reassurance is very much appreciated.

    Incidently, I only have 3 years to run on the Old Mutual Fund. But, I did have to fight with my Financial Advisor to get him to recommend an ETF portfolio. In fact, he still thinks I’m making a mistake as he believes his Mutual Funds are better during a bear market or recession. I’ve given up trying to reason with him. But at least I feel like I have wrestled some control back by using ETF’s.


    • Well done Pete. Privately, one day, your advisor will see the light. I’ve seen it happen. Then they adjust their personal portfolios while keeping their clients in actively managed funds.


  9. Pete says:

    Hi Andrew,

    I had a catchup with my FA. I was able to get my point of view across and back it up with analogies from your book. One point that I couldn’t argue is the bid/spread price.

    He says that I am losing a few percent each time I buy my Vanguard VWRD (US) on the London Stock Exchange due to the lack of liquidity. Is this true? And how much of a role does it really play? I couldn’t find anything on this in your book.

    Thank you again, Pete

    • Hi Pete,

      You aren’t losing a few percentage points based on low liquidity. I am, however, amused by that argument. Every stock has a built in bid/ask spread. If liquidity is reasonable, it’s hardly anything. Such is the case with Vanguard’s VWRD. Unlike ongoing costs, however, the bid ask spread is only relevant when you purchase or sell. It’s not an ongoing annual charge, such as those that your current funds are attracting. And it likely amounts to less than 0.1% at the time of purchase or sale. I’m not talking about 0.1% per year. I’m talking about 0.1% at the time of each purchase or sale. That’s unavoidable, when investing in the markets. It’s also microscopic, so it’s nothing to worry about. Your advisor likely doesn’t even know this. But he figures that if he can stump you with something (even something that he doesn’t understand) he may be able to frighten you.


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