Investors Coping with Stress during the Credit Crisis

How are investors coping these days? The following is an article from the Toronto Star from 25 October, 2008 on how investors are coping with chaos states:

Retiree Murray Soupcoff used to be an active investor, checking stock markets all day and making frequent changes to his portfolio.

Today, he’s weaning himself from the business news and trying to relieve the stress of an evaporating retirement fund.

Yesterday morning, he woke up to hear that the Asian and European stock markets had plunged.

He didn’t look at the Toronto Stock Exchange until noon, when he found it was down only 200 points. This was good news, in his view. (The index closed down 37 points after dropping almost 700 points at the opening.)

“It’s hard not to pay attention,” he says.

Twice a day, he practises transcendental meditation for 20 to 25 minutes at a time.

“Meditating keeps me calm,” he says.

“When you’re feeling fear, the primitive side of the brain – the fight-or-flight reflex – is activated. I’m trying to get back to the rational side.”

Whether doing yoga, taking walks or tuning out the media, investors have different ways of staying composed during one of the worst weeks ever for stock market volatility.

I talked to a few people who are living on their investments after leaving the world of work. They say it can be hard to watch the market turmoil.

Soupcoff was ahead of the curve. He sold many profitable investments last spring and put the money into a high-interest savings account.

“I was worried, but I never imagined things would be this bad. I made the mistake of going back into the market from time to time, so I didn’t do as well as I should have.”

He now holds mainly dividend-paying blue-chip stocks and income trusts. These are a consolation in a terrible market.

“At least, you’re being paid to wait,” he tells me.

But income trusts, which distribute high yields to investors without paying tax, are a temporary haven. By January 2011, they will be taxed as if they were corporations.

Soupcoff owns income trusts that have cut distributions (such as Arc Energy Trust) or have announced plans to cut distributions (such as CI Financial Income Fund).

He’s not checking his portfolio value until markets improve.

“If I looked, I’d probably panic and sell it all out,” he says. “I’m 65 and there’s only so long I can wait.”

For the complete story of the how the credit crisis is affecting lives go to the business section of the Toronto Star.

How are you coping with the credit crisis? Are you just about to retire and have to postpone it now? Please comment.

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