Opportunity in the Midst of Difficulty

With financial news making headlines regularly since the start of 2016, I want to depart from my usual rule of not commenting on the financial markets.

Since it is statement time, some background is necessary to ease any concerns you might have about your investments.

Let’s start with 2 fundamental tenets:
1. You hire me to advise you so you can reach your financial goals. I take that responsibility very seriously, so you can let me worry for you. I am monitoring occurrences and making changes where necessary.

2. Your news about your life events and financial situation will influence your outcome positively or negatively far more than headlines in the general media. The more relevant information you convey to me the better advice you will get.

Part of my hesitation about writing this post was the fact that I find the analysis of market conditions fascinating. Yes I am a data geek. But in reviewing what I could write about, it became apparent that most of you would find my recitations so boring you would fall asleep faster than if you had eaten a turkey sandwich and drank a glass of warm milk.

So where to begin? Oil prices continue to drop and drag down the loonie with it. One silver lining in this cloud is that a low loonie can positively affect the return of your non Canadian mutual funds.

Investors must put the present into a historical perspective. The stock markets that your investment managers participate in never go up in a straight line. Yes the trend is always upwards, but it is a ride with some turbulence. There is a name for this variation, it is called volatility. The last six years after the financial crisis has been a positive(bull) market, However, that growth has been based in part on world governments intervention in financial markets. That cannot go on forever; this is why the US has raised interest rates. Investors must understand that the returns they have enjoyed for the past few years will be tempered in the near future.

Volatility is the new normal. There are a number of reasons for this. The main one is that that technology permits rapid transfer of information and therefore creates opportunity for the potential overreaction from market participants, especially speculators.

Your investment managers see these volatile periods positively because they can buy great companies on sale. The best of them are backed by strong research teams and they use their experience to analyze companies and sectors of the economy. My job is to evaluate and choose the ones that suit your profile on your behalf.

If you want a more detailed analysis about your own investments, please feel free to discuss this with me by phone, e meeting, or in person.