Monday, October 15, 2007

Perspective on my market timing

Well, Ms. Loonie and I got back last night from our weekend trip to Michigan. We had a great time, and saw some beautiful countryside. The area we visited is actually around the same latitude as cottage country in northern Ontario, so we got to see some great fall colours and an incredible view of Lake Michigan. It's an odd sensation driving "down" to the United States and ending up hundreds of kilometers north of where you started.

After cashing in the company stock in my RSP, I wrote about the subsequent jump in the value of the stock I had just sold. Now that I've completed my re-allocation into low-cost index funds, I've had another look at the relative performance of my current investments versus the stocks I used to hold. Since the end of September, my retirement investments have grown by 2.6%. My old portfolio, on the other hand, has dropped by 0.2% (essentially holding steady). All-told, I'm up by around $1,000 over where I would have been had I held onto my individual stocks.

That's encouraging.

I know that these short-term returns mean very little in the context of my overall retirement plan, but they have illustrated just how little my initial "loss" of a few hundred dollars actually means in the grand scheme of things. Throw in the fact that my retirement investments are now heavily diversified, and I'm feeling pretty good about my decision.

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