Naughty or nice?

Naughty or Nice

Dec 19, 2022

He’s making a list. He's checking it twice. He’s going to find out who’s naughty or nice… The following investment behaviours or practices will not only land you squarely on Santa’s naughty list but they will also lead to less than optimal performance of your investment portfolio.

Naughty investment practices

There are many naughty investment practices. The worst of them is not investing at all! Keeping your savings in cash is one of the fastest ways to burn a hole in your net worth. By ignoring the rate of inflation or accepting sub-par returns on your funds, you are reducing the future value of your money. Make it a new year’s resolution to start investing instead of just saving. But don’t just invest willy-nilly- make sure you know what your investment objectives are and communicate those clearly with a licensed and trusted financial advisor so that they can guide you accordingly. The adage, “If you don’t know where you are going, you will probably end up somewhere else,” is as true of investing as anything else.

If you are guilty of making investment decisions based on emotions, then expect a lump of coal in your stocking from Santa this year! Markets can be erratic with times of larger-than-normal volatility- this year has been a key example of that. The number one rule during market downturns is not to panic. In down markets investors are often overcome by their “loss aversion” instincts, thinking that if they don’t sell, they stand to lose more money. However, with bonds (and stocks) and mutual funds invested in these assets, you do not actually lose money unless you sell at the depressed prices. The key is to determine if the decline in prices is due to general market conditions or is in fact due to a deterioration in the credit dynamics of the issuer (or issuers of the assets in the fund), which could be a pre-cursor to a default. An investor who has conviction in his own long-term investment strategy is far less likely to follow the panicking herd over the cliff.

Often investors think they can maximize returns by taking a large investment exposure in one security or sector. But when the market moves against such a concentrated position, it can be disastrous and would certainly land you on Santa’s naughty list. That is why it is so important to diversify your portfolio. To ensure you are properly diversified the investments you hold should be from different industries, asset classes and geographical regions.

By avoiding these investment behaviours you can avoid Santa’s naughty list and increase your chances of having a successful investment journey. Happy holidays!


Toni-Ann Neita-Elliott, CFP is the Vice President, Sales & Marketing at Sterling Asset Management. Sterling provides financial advice and instruments in U.S. dollars and other hard currencies to the corporate, individual and institutional investor. Visit our website at

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