The latest round of market volatility might have some feeling uncomfortable, therefore I’d like to make a few comments to hopefully put your minds at ease.

I’m sure I sound like a broken record, but it bears repeating -- the portfolios I’ve constructed are well-diversified across multiple sectors/businesses, which continue to display strong balance sheets, solid management and the ability to withstand the test of time. These companies have pivoted and adapted to unprecedented conditions over the past few years and I see no reason why that would not continue.

While I don’t view this recent downturn (and this year so far) as anything like February/March of 2020, I will reiterate what I did then and have always -- downturns create opportunities and we will indeed see the markets climb back up in time. In the meantime, clients collect dividends from a significant portion of their portfolio, while at the same time owning high-quality businesses, displaying defensive properties.

Now on to some good news! Recently I have been talking about how the consumer, both here and in the US, is expected to continue spurring on the economy. The chart below illustrates what has been happening since the beginning of 2021. RBC Economics expects Canadian consumer spending to grow +2.6% in 2022. This compares to historical growth of +1.4% in 2019, -6.2% in 2020, and +5.2% in 2021. Consumer spending has improved sequentially from Q2 2020 (peak of pandemic), driven by strong levels of government support, as well as price appreciation of housing and financial assets.

I know full-well that maintaining an upbeat attitude may appear more challenging than ever these days, but I want to assure you there are positive aspects to focus on. If I feel there is anything that warrants concern, I will certainly let you know. In the meantime, I advise staying the course.

Libby

 

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