One in four Canadians (24%) plan to withdraw from stock market investments this year, found a Fonder poll, reported by Financial Post.
In total, therefore, there are 7.5 million Canadians preparing to collect their losses, which are however virtual as long as the financial products are not sold. Through these withdrawals, investors seek to minimize their losses.
But this wave of sales could make the problem worse. In a bear market, this influx of selling will accelerate the decline in financial markets, fueling the pessimistic sentiment that has already spread this year.
Admittedly, the bottom has not yet been reached in the financial markets. Rising inflation, rising interest rates and the prospect of a recession are not encouraging. The S&P/TSX index has already lost more than 16% since March, and the trend of recent weeks is not favorable.
Above all, investors are inevitably approaching the ideal time to enter the market. They will be able to buy at a low price, thereby lowering the average acquisition value of their financial products. That time probably hasn’t come yet, but investors should be more inclined to consider adding to their positions rather than exiting the market when it’s at its lowest.
“Snack at 3,600 points, bite at 3,300, stuff yourself at 3,000,” suggest Bank of America analysts, pointing to the S&P500. This index has gone from almost 4,800 points in January to 3,650 points in recent days.