Equity Markets

Last quarter, we commented on the unusual low-level of volatility. As this is no longer the case and market gyrations are more commonplace, it’s important to remember that volatility is the historical norm and not the exception. Investors continually worry, rightfully so, about macroeconomic and company specific risks. The worries of the day are global trade and the pace of interest rate increases. We feel it is healthy to have corrections, to consider risks, in what we feel is a generally positive investing environment. In this environment, Canadian equities started off the year limping for investors. US and International equities were volatile but performed better than domestic equities and were helped by a weakening loonie for Canadian investors.

I often get asked, “Scott, what is your best single piece of advice?” Typically, I will respond that sometimes the best move you can make is to limit making bad decisions. Financial planning mistakes made now may sabotage your retirement dreams later. Poor financial habits such as overspending, lack of planning and bad risk management will increase the probability you will outlive your money.

Volatility Makes a Comeback

After a long period of strong stock market returns with lower-than-average volatility (2017 witnessed the historical best ratio of high returns versus low volatility), a sudden drop over a few days or weeks always seems to come as a surprise for investors. It also makes for great headlines, which tends to feed client fears about their investments. The fact that market volatility stirs investors’ emotions is quite normal. Then again, market downturns are also, well, normal.

On one hand I find it confounding that many people only consider saving for their retirement once a year – and rush to contribute to their RRSP before the annual deadline. On the other hand, at least there is a deadline that forces them to contemplate their financial future at least once a year. The cutoff to make a contribution to reduce 2017 taxes is March 1st. For those sitting on the fence about whether to contribute or not, here are some compelling reasons why you should at least consider doing such.

Equity Markets

We can draw a parallel between our equity markets and the weather. This market is a like a warm and dry summer that doesn’t want to end. We can appreciate it but also must realize that winter will return at one point. Winter is volatility and stocks are still wearing their shorts. In calm fashion, all important equity markets for Canadian investors offered good quarterly returns to close out a profitable 2017. The most important themes are a return to a solid economic backdrop post energy crisis for Canadian equities, a corporate tax boost for US equities and improving economic strength for EAFE equities.

Equity Markets

In a repeat performance from last quarter, investors are accumulating nice gains from their equity investments without having to suffer much in volatility. Over the last few months, most of the morning meetings at Louisbourg have started with a statement suggesting that equity futures were slightly higher.

Equity Markets

Equities are progressing higher with below average volatility. This has been the case for some time despite President Trump’s inability to enact significant changes. It is also worth noting that this rather calm period is happening in conjunction with important central banks reducing stimulus for the first time in a very long time.

Equity Markets

This quarter was marked by the inauguration of President Trump and the political circus that followed, including new concepts such as “alternative facts”, the triggering of Article 50, which signals that Britain will officially leave the EU no later than April 2019, and continued concerns about pro-protectionist sentiment in Europe.