The whole world is getting richer, it seems. We have measures of economic growth and relative income across countries that are better than ever.
As U.S. hiring, housing and manufacturing improved, the S&P 500 Index reached an all-time high yesterday, topping 1,700 and extending its advance for the year to over 24%. The index has passed through two century marks this year (1600 and now 1700). Only once before, in 1998, did the index cover three round numbers within the year (1000, 1100 and 1200) and there is still lots of time this year to go through 1800 …and so, based on P/E expansion, welcome to an obvious bull market.
In Canada, the S&P/TSX Composite Index gained 3.2% in July and is now up almost 11% for the year. However, it still trails our U.S. counterpart by a fair margin. A big contributor to the lag in performance is the Index’s naturally high concentration in the Materials sector – which could be blamed on the economic slowdown in China, the world’s largest consumer of raw materials.
Internationally, European markets continued to surge, with the MSCI Europe Index rising 4.8% last month. Greece secured their latest bailout and the European Central Bank (ECB) said recent economic indicators signal that “the worst” is now behind the eurozone. The ECB also reiterated that officials plan to keep interest rates low for the foreseeable future, helping the struggling region with its ongoing recovery.
That said, looking at global benchmarks doesn’t really mean much to your personal portfolio, does it? It’s as if I just told you that the global weather forecast looks to be “sunny” … a general weather forecast doesn’t mean anything to your specific city and specific long weekend plans – to properly plan for your weekend activities, you want to know which temperatures to expect, if it’s going to rain, etc - and so the same theory ought to apply to your personal portfolio. This is why diversification and asset allocation have proven to be the most effective way to mitigate the many different risks to which your financial assets will be exposed – helping you to plan for your specific goals, needs and objectives.
Enjoy the weekend.
D.
Dian Chaaban
Investment & Wealth Advisor
Chaaban Wealth Management Group
416.842.4234