Expand your time horizon to get a better sense of your portfolio’s performance

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With the acceleration in trading and the rapid delivery of news, investors’ time horizons are becoming shorter and shorter.Illustration by Chloe Cushman/National Post files

When it comes to analyzing the performance of one’s investment portfolio, timing is everything. The problem though is with the acceleration in trading and the rapid delivery of news, one’s time horizon is becoming shorter and shorter. We think this will only get worse as new technologies such as blockchain take settlement times from days down to seconds.

The risk in all of this is that investors will start reacting to news events instead of proactively analyzing it to separate what is important and what isn’t. Consequently, the fear of missing out will often take over, driving many to herd into those segments of the market that have recently been outperforming and away from those underperforming.

We’ve seen this in funds flow, especially here in Canada as those managers with a heavy weight towards U.S. equities have experienced a tremendous amount of new business given their strong returns since 2009. But this hasn’t always been the case as those managers with a concentration in resource-based markets such as Canadian equities were the shining stars in the period prior.

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