It was a two day trip from Prince George to Pacific Rim National Park, a spectacular west-coast beach about three hours west of Nanaimo. Although the drive took us through a scorching hot summer days, our arrival at the coast was greeted with chilling horizontal wind and rain. But still, a dry lander doesn't journey for two long days and not take a swim.
With some apprehension we noted the warning signs posted strategically along the beach, alerting swimmers of the potentially deadly riptides those majestic waves pack. Always cautious with our children, we watched carefully to keep them from venturing too far into the unwieldy waves, and lit a fire to help keep them warm. But who was to supervise daddy?
Nearly stubbing my toe at the base of a warning sign, I ran out into the waves and began floating my not insubstantial midsection on the various tumblers that crested forth. The ride was exhilarating, and seemed harmless enough.
A few times a large wave would pound me soundly into the sand, but even that was a relatively soft landing.
Like a black widow, the glorious waves caressed me out to deeper and deeper waters.
Riptides -for those who haven't experienced them, a riptide is the pullback of a large wave as it inevitably flows back down the beach into the ocean. If frolicking in an eight-foot wave is particularly fun, fighting its five-foot back current is puzzling, and potentially deadly.
That was me at that moment. I could see my brother-in-law about 75 yards away. From that distance my yelling and frantic arm movements probably looked like: "Dude! Come over here! This is awesome!"
He waved and smiled awkwardly back. Apparently my pleas were obscured by the thunder of the waves. Or worse, he knew there was nothing he could do to help.
I was not jovial. Yelping for rescue, wave after giant wave smacked me in the back, cresting over my head, followed by chest-high riptides carrying me relentlessly into deeper waters. This violent cycle was also drifting me toward a jagged, barnacle-covered rock peninsula nearby. As attractive as the thought of landfall was at that moment, my flailing soggy flesh and those barnacled rocks were an oceanic blender to a handful of raspberries.
Pray.
Somehow, I think partly by learning to fight the weaker current and swim with the stronger one, I began to make progress. A toehold here, a breathy swim there, eventually I was able to get a firm enough footing to claw my way back to shallower sandy shores and on to the safety of sure feet.
WAVES AND MARKETS
I could have avoided my dangerous drama at the beach by obeying a few simple rules. The signs were posted everywhere.
The ebb and flow of financial market valuations is its own fear factor. As with swimming out on treacherous shores, investing in volatile securities should only be done after following well-published guidelines, and then only within the risk tolerances of each individual.
The time to prepare for turbulent waters is when you are on firm ground - planning your approach carefully, setting clearly-defined limits and an escape plan.
Preparing for obnoxious markets is likewise done in the pre-work before investing, and at checkpoints along the journey. Before a dollar is invested, investors and advisors do well to probe deeply in to the unique features which make them person they are. Then, at each meeting, the discussion is something like this: "Here is your risk profile we discussed earlier. Has anything changed? Here is how your account looks today after the past few months and weeks. Here is what we should consider in order to keep the risk profile of your account in line with your long-term objectives. What are your thoughts?"
If that is consistently done, then when the storms blow in, the work is already done. When a world class wave gives you a joyful ride, keep your head above water, and your feet on solid ground. Make adjustments while your feet are on the shore. Fix your roof in the sun. Set your foundation when the ground is settled.
Markets are far more unpredictable than waves, but wax and wane they do. With a foundation of good planning, the last chore is the job of looking through the glass (or plasma as it were) and waiting for the storm to blow over.
And of course, a little kindling (i.e. cash) is always handy during a storm.
Mark Ryan is an advisor in Prince George with RBC Wealth Management, Dominion Securities (member CIPF) and can be reached at [email protected].
