Franklin Templeton Encourages Canadians to "Take Stock" of How Emotions
Interfere with Investment Decisions
TORONTO, Feb. 13, 2013 /CNW/ - When the pullback of the stock markets happened
in 2008, many investors let emotions overtake their investment plans.
Behavioural economics sheds light on why negative events seem to have a
profound and lasting ability to derail investors' longstanding, rational plans.
Franklin Templeton's Time to Take Stock(TM) examines the current situation
facing investors and the human behaviours that impact investment decisions. It
explores important facts investors may be missing regarding more recent
positive market developments around the world, and provides straightforward
strategies to help investors reposition their portfolios with an appropriate
allocation to Canadian and global equities and fixed income.
According to Franklin Templeton's recent Canada investor survey hosted on the
Angus Reid Forum, a third (34 per cent) of Canadian investors acknowledge that
they take an emotional approach to investing and another quarter (26 per cent)
are unsure of whether they do or not.
"Canadians are still looking at equities through 'bear market glasses'. The
dramatic market drop of 2008 continues to stand out in investors' minds, even
as the market has climbed back up," said Ronice Barlow, head of strategic
planning & business development - Canada, Franklin Templeton Investments Corp.
"Many investors who instinctually moved money out of equities into
traditionally 'safe' investments a few years ago are finding that many of
these strategies have been offering a marginal or negative real return because
interest rates are so low."
In fact, when Canadian investors were asked if they currently view fixed
income assets (including bonds and bond mutual funds) as a "safe haven" for
their money, 61 per cent indicated that they do, according to the January
2013Canada investor survey. Also, over a third (35 per cent) believe that
fixed income assets offer the best returns in today's markets. These views on
fixed income may be keeping many investors on the equity market sidelines, and
further from their long-term financial goals, in a period where the S&P/TSX
Composite index has risen about 68 per cent since the market bottom in March
Time to Take Stock explores three behavioural finance concepts as a window
into why investors hold the beliefs and make the decisions they do:
-- Availability Bias - Decision-making is greatly influenced by
what is personally most relevant, recent or dramatic. For
investors, this can mean that the unprecedented events of the
2008 financial crisis have left a stronger impression than the
68 per cent gain in the S&P/TSX Composite index since the
-- Loss Aversion - The pain of loss is generally much stronger
than the reward felt from a gain. The desire to avoid market
losses has driven many investors to move their money out of
stocks into low-yielding cash equivalents such as money market
instruments or Guaranteed Investment Certificates (GICs).
-- Herding - An innate tendency to follow the crowd makes it easy
for investors to get caught up in "what everyone else is
doing." This can cause investors to lose sight of their
long-term goals and pull their money out of equities at the
wrong time or sit on the sidelines in cash while the market
rises. More than half of Canadians surveyed (59 per cent)
report that they don't pay attention to what others are doing
when investing, yet the exodus from the equity markets paints a
"We encourage investors to meet with their financial advisor to figure out
their long-term objectives and risk tolerance. An advisor can help them remove
the emotion from their investment decisions and position their portfolio to
meet their future goals," added Ms. Barlow.
Time to Take Stock(TM) is the latest in Franklin Templeton's series of thought
leadership pieces that demonstrates why equities are a critical component for
investors' long-term success. Investors can find more information on
About Franklin Templeton Investments
Franklin Resources, Inc. (NYSE: BEN) is a global investment management
organization operating as Franklin Templeton Investments. Franklin Templeton
Investments provides global and domestic investment management solutions
managed by its Franklin, Templeton, Mutual Series, Bissett, Fiduciary Trust,
Darby, Balanced Equity Management and K2 investment teams. The San Mateo,
CA-based company has more than 65 years of investment experience and over
US$809 billion (over C$807 billion) in assets under management as of January
Franklin Templeton Investments Corp. has more than 600 employees providing
services to more than one million unitholder accounts and more than 200
pension funds, foundations and other institutional investors. Additional
information on Franklin Templeton Investments Corp. can be found at
About the survey
On January 15 and 16, 2013, an online survey was conducted among 946 randomly
selected Canadian adults who currently invest in stocks, bonds or mutual
funds, or have done so in the past five years, and who are Angus Reid Forum
panelists. The margin of error which measures sampling variability is +/-
3.05%, or 19 times out of 20. The results have been statistically weighted
according to the most current education, age, gender and region census data.
Discrepancies in or between totals are due to rounding.
* Source: FactSet, TSX. © 2013 FactSet Research Systems Inc. All Rights
Reserved. The information contained herein: (1) is proprietary to FactSet
Research Systems Inc. and/or its content providers; (2) may not be copied or
distributed; and (3) is not warranted to be accurate, complete or timely.
Neither FactSet Research Systems Inc. nor its content providers are
responsible for any damages or losses arising from any use of this
information. Past performance is no guarantee of future results. Source: TSX
© Copyright 2013 TSX, Inc. All Rights Reserved.
Sarah Kingdon, Corporate Communications, Franklin Templeton Investments,
SOURCE: Franklin Templeton Investments Corp.
To view this news release in HTML formatting, please use the following URL:
CO: Franklin Templeton Investments Corp.
NI: FIN ECOSURV ECO
-0- Feb/13/2013 14:09 GMT
Press spacebar to pause and continue. Press esc to stop.