We see it all the time . . . people’s lives through the lens of Instagram or other social media platforms and we believe that it is a direct view of their lives. The same can be said about investment performance, we hear that someone has exorbitant returns and we believe that we should experience the same thing even though you know nothing about their asset allocation (percentage in stocks versus bonds) or what they are invested in.

People tend to scream from the rooftops when they experience large returns but you don’t hear as much of a whisper when their portfolio is in freefall. Think back to 2020 and how much you heard about the Ark Invest’s Disruptive Innovation ETF (ARKK), which provided a massive annual return of 152%. The fund’s manager, Cathie Wood, seemed to have her finger on the pulse on everything that was happening such as the Work-From-Home and Electronic Vehicle trends. Now, fast forward to today and ARKK has whipsawed and has a 2021 year-to-date return of -25% (when the S&P500 has returned 27% in the same time period). We haven’t heard any of the usual market pundits say much about Cathie this year and the sad thing is that a lot of retail investors were too late when they invested in ARKK so they only experienced the 2021 negativity.

It may feel like the right move to change your investment strategy and jump on the most recent investment trends but if you’ve heard about it then it is probably too late. Changes to your investment strategy should only be made if something changes materially in your life.

We try to teach the younger generation about fads and how a fad usually falls out of favor as quickly as it came in so why would you gamble your life savings on one?

Want to discuss your Lifelong Financial Plan? Email me at info@financerx.ca