A recent article in The Globe and Mail (one of Canada’s national newspapers) reports that RBC Dominion Securities Inc. (owned by the Royal Bank – I own this) is advising us that we are in for a rocky road ahead and that investors should take action to protect themselves. Ok fine, but just wait until you hear what they recommend:
To protect themselves from an â€œabsoluteâ€ stock market decline, RBC recommends that investors pare their equity exposure outright, either through the use of options or by lowering their volatility quotient.
Through the use of options or lowering their volatility quotient??? What the F@$^ is that supposed to mean. Lower your risk through the use of options? I imagine that they mean using strategies like covered calls, but to the average reader this could mean anything. Lower your volatility quotient?? What a load of crap!
Here is how I read this type of statement:
The end of the stock market world as you know it is about to end. The only hope that you have as a human is to call our investment firm immediately and we will take the appropriate steps to ensure that you are protected. We will use extremely simple concepts to ensure you are diversified and enact a pretty standard asset allocation strategy, but we will NOT explain it to you that way. Instead, we will try to confuse you and use big words and phrases like “options” and “volatility quotient” to convince you that you have no idea what you are doing when it comes to the stock market. Save yourself, call us.
I hope that the investing public is much smarter than RBC Dominion Securities believes it to be. This is nothing but outright scare tactics and why I spend the time to manage my own account. I think you should to.