Is the press bearers of only bad news or is this just a Bear Market?  Currently, there are serious and necessary adjustments happening in the market. With a major investment bank filing for bankruptcy protection, mortgage financial vehicles collapsing and the US real estate market going through serious deflation, we are in a turbulent time.  Major economists and financial analysts do not believe the world is entering a recession, rather just a bigger than normal correction.  Declines in markets do not necessarily mean we are heading into a recession.

While it is okay to panic, it is definitely not okay to react.  In fact, this is the most important time to stay the course.  Sticking with your investment and financial planning strategies is most important at times like these.

Depending on your situation, some Key Financial Strategies could be:

1.  Ensure short term cash needs are covered.  If you require some of your funds in the next year, ensure it is available in cash or liquid investment.  It is not a time to be withdrawing assets when prices are volatile.

2. Dollar Cost Averaging:  We are in a volatile market and it will continue for the short term.  Once your short term cash needs are covered, it is advantageous to dollar cost average into the market.  This strategy works particularly well in volatile times. Now is a great time to make your RRSP contribution.

3. Rebalancing: If you have become overweighed in one sector and a rebalancing would be normally be recommended, rebalance conservatively. in fact, depending on your situation, perhaps rebalancing should be delayed until market stability returns.

4. Leverage Strategy: With interests rates so low, investigating a leveraged strategy could be a suitable investment option for you.  In open investments (non-registered), the interest is tax deductible.

5. Tax Planning: In your end of year capital gains review, determine your potential loss positions in significantly underperforming sectors to offset gains.  Capital losses can be carried forward indefinitely and back three years.