Good morning,

I trust everyone had a wonderful weekend, and hopefully everyone is settling into the spring season. Big eclipse day here in this part of the world……and yes…the kids are home from school again, busy times!

Given this time of year is a busy one for all of us, I thought I’d share a little story with you before giving a little update on the markets, and then I’ll share a few lessons that we can all put in our back pockets as we cruise into the wonderful week in front of us…….

The Stonecutter

A stonecutter was dissatisfied with himself and his position in life.

One day, he passed a wealthy merchant’s house. Through the open gates, he saw many fine possessions and important visitors. “How powerful that merchant must be!” thought the stonecutter. He became very envious and wished he could be like the merchant.

With hard work and persistence, the stonecutter became the merchant, enjoying more luxuries and power than he had ever imagined.

But soon a high official passed by, carried in a sedan chair, accompanied by attendants and escorted by soldiers beating gongs. Everyone, no matter how wealthy, had to bow low before the procession. “How powerful that official is!” he thought. “I wish that I could be a high official!”

Then he became the high official, carried everywhere in his embroidered sedan chair. But it was a hot summer day, so the official felt very uncomfortable in the sticky sedan chair. He looked up at the sun. It shone proudly in the sky, unaffected by his presence. “How powerful the sun is!” he thought. “I wish I could be like the sun!”

To his surprise, he became the sun, shining fiercely down on everyone, scorching the fields, cursed by the farmers and laborers. But a huge black cloud moved between him and the Earth, so that his light could no longer shine on everything below. “How powerful that big storm cloud is!” he thought. “I wish that I could be like that storm!”

Then he became the storm, flooding the fields and villages, shouted at by everyone. But soon he found himself being pushed away by some great force, and realized it was the wind. “How powerful that force is!” he thought. “I wish that I could be as powerful as the wind!”

Then he became the wind, blowing tiles off the roofs of houses, uprooting trees, feared and hated by all below him. But after a while, he ran up against something that would not move, no matter how forcefully he blew against it. A gigantic, towering rock. “How powerful that rock is!” he thought. “I wish that I could like that rock!”

Then he became the rock, more powerful than anything else on Earth. But as he stood there, he heard the sound of a hammer pounding a chisel into his hard surface, and felt himself being changed. “What could be more powerful than I, the rock?” he thought.

He looked down and saw a tiny stonecutter far down below him.

The Overachiever

As your financial partner, we feel privileged to work closely with our clients, helping them to preserve, grow and enhance their wealth, life and legacy. In our work, we often come across traits such as adaptability, persistence, innovation and overachievement, not surprising in our work, particularly with you entrepreneurs and enterprising families.

While we understand the privileges and pitfalls of such a mindset, it gives us the opportunity to provide sound advice to our clients as they continue to build, grow, drive and thrive forward.

When we hear the term "overachiever," we usually think of someone who performs beyond expectations. Overachievers set extremely high standards for themselves and, unfortunately, they never seem to be satisfied with their accomplishments. Even if they achieve great things, they always strive to do more. Overachieving is generally associated with greater success in life, but it can also take a toll on our physical and mental health, and affect our relationships. Overachievers are often perfectionists, highly focused on work and never fulfilled.

Overachievers often sacrifice their health, happiness, and relationships in pursuit of constantly moving targets. Research suggests that overachievers may be less happy than people who are not classified as such. CEOs, for example, have depression at roughly twice the rate of the general population. Their tendency to take on too much work can also lead burnout…..

Trying to maintain a high level of output and performance can be exhausting and impossible to keep up for a long time. When an overachiever reaches their breaking point, the burnout can be devastating……which is why I’d like to make a clear distinction between the Overachiever and the High Achiever.

To determine if we are overachievers, we must evaluate our relentless pursuit of achievement. If we judge ourselves solely on the outcome and not the journey, we may be overachievers. This mindset can take a toll on our physical and mental well-being. To overcome overachieving, we must take a step back, practice self-care, and connect with others. It's important to recognize that being a high performer is different from being an overachiever. While both pursue success, high performers care more about how well they perform and the journey to reach their goals, whereas overachievers are solely focused on the end result.

“You are the sculptor of your own reality.

Don’t hand your tools to anyone else.”

Jeff Brown

Embracing the High Achiever Mindset

I’d like to draw a contrast between overachieving and being a high performer. If you are a high performer, you embody the same positive characteristics as an overachiever, but you are self-aware – and you are able to shift your focus more on the journey than the outcome.

Remember, overachievers are never satisfied with their achievements. Their focus is on the goal, and not what it takes to reach the goal. High performers on the other hand, are focused on their goals, but they care much more about how well they perform. Their success doesn't just mean finishing on time or ticking certain tasks off a list. Instead, it's about the journey and how much they learn along the way.

There are steps that we can take to help keep their need for success from hindering their physical health, emotional well-being, or social relationships.

One of the first steps is to take a moment to consider why the goal is so important. It's essential to determine what's driving the need to reach that goal and what would happen if the goal isn't achieved. This helps provide more perspective and clarity about what the goal represents, and it serves as a checkpoint for making sure the goal is realistic and attainable.

Another step is to practice self-care. Even if someone is working hard to reach their goals, it's critical to take the time to care for themselves. Self-care involves giving oneself breaks, rewarding one's efforts, and doing something each day that will benefit their health and wellness. Implementing these types of strategies can also make it easier to manage stress.

The third step is to connect with others. Often, overachievers let their relationships suffer in the pursuit of their goals. However, maintaining healthy social connections is actually more likely to support long-term success. Take the time to connect with others, reach out to them, devote time to loved ones, and be willing to let others provide support along the way.

While there is little scientific research on overachieving and whether it's negative or positive, the different between the overachiever and the high achiever is a mindset. It’s your awareness and your ability to take steps to ensure you can maintain that driving force, while ensuring you are taking care of yourself and enjoying the process, and the moments.

Let’s take a brief look at the markets and then some lessons we can take away from the story of the Stonecutter…

And now, to the markets

The overachiever mentality can find its way into investing as well, which is why our focus here at Henderson Wealth is maintaining the high achiever mindset when investing, an important aspect of long-term growth.

Global equity markets have been somewhat directionless over the past few weeks, likely taking a breather after a reasonably good first quarter. Investors are digesting recent jobs reports in Canada and the U.S. Meanwhile, the consensus view remains that rate cuts are looming in the second half of the year though the exact timing and degree of cuts are topics of debate given recent comments from a few officials at the U.S. Federal Reserve. Given the strong global equity market gains over the past year, we discuss market valuations and return expectations going forward.

We have and continue to be guided by a simple but intuitive framework for longer-term investing. In essence, it suggests that long-term returns can be particularly rewarding when investments are made at inexpensive valuations. Likewise, investing results have proven to be less satisfying, over time, when investments were made at elevated valuation levels. Importantly, this guideline has no real bearing on investment returns from one year to the next. Rather, it has proven particularly useful for investors to use this over longer time frames to help assess the long-term return potential of various asset classes. Reflecting on this basic rule recently has led to us to ask the question: where are valuations today? And importantly, what expectations should we have for longer-term returns from equities?

On the surface, the large cap U.S. stock market, as measured by the S&P 500 index, appears expensive. That’s not that surprising given how well it has performed since the lows reached in the fall of 2022. Its forward Price to Earnings ratio, which reflects the current price divided by the earnings expected from the companies within the index over the next twelve months, currently sits at about 21. That compares to its average of 16 over the past twenty to thirty years. But, as has been well documented in recent months, the gains of the U.S. market over the past year have been heavily influenced by the performance of the “Magnificent 7”, a group of seven large technology stocks. If we strip out these seven stocks, the market’s P/E ratio falls to a more reasonable range of 17-18. In other words, the U.S. market is not cheap but may not necessarily be as expensive as one would think.

A similar story exists elsewhere. The forward P/E ratio for the Canadian equity market is just below 15, which is around its long-term average. The same ratio for overseas developed markets is also just below 15, which is slightly higher than its long-term average. In emerging markets, the ratio is nearly 12 which is also just above its longer-term average.

The key takeaway is that despite the fact equity markets have done well since the lows reached in 2022, the valuation levels, outside of some of the largest technology stocks in the world, are not necessarily at the kind of elevated levels that would suggest investors need to meaningfully recalibrate their long-term return expectations. Nevertheless, should markets continue to march forward without a meaningful pick-up in earnings, we may have to revisit this exercise as it could be indicative that markets have pulled forward some of the future return potential from the asset class. As we look at investing from a high achievers lens, it means that we will continue to employ discipline, actively managing asset allocation with both experience and patience because, as always, there is opportunity amid uncertainty.

Simplicity and Harmony

Let’s take a moment to understand what the story of the Stonecutter can teach us, lessons that we can ponder on as we head into the week.

Contentment: being content doesn’t come from external power or possessions, but from an internal sense of peace and acceptance.

Perspective: Looking through a different lens – the stonecutter had everything he needed to be content, but he only realized it after experiencing life from different viewpoints.

The Nature of Desire: We all understand this - desires can be endless and ever-changing, leading to a cycle of discontent. Recognizing this allows us to step back and evaluate what truly matters to us.

Power of Mindset: We are all unique, our experience of life is shaped by our thoughts and desires. The stonecutter’s situation didn’t need to change for him to find contentment; his mindset and perspective did.

Gratitude and Acceptance: The story also touches on themes of gratitude and acceptance, which, in my view, and two of the key elements of Wealth….our ability to embrace our current circumstances can lead to a richer and more satisfying life.

Embracing the Delicate Balance

There is absolutely nothing wrong with wanting to pursue goals or make changes to our external circumstances. In fact, setting and achieving goals is a fundamental aspect of personal development and can lead to increased satisfaction, fulfillment, and well-being. However, as the story of the stonecutter beautifully illustrates, there is a delicate balance between pursuing external goals and finding internal contentment and fulfillment. This balance is crucial in ensuring that our relentless pursuit of goals doesn’t lead us into an endless cycle of desire and discontent.

If you find yourself resonating with the stonecutter’s journey, feeling caught in a perpetual chase after the next big achievement without finding the fulfillment you seek, know that you are not alone. Many have walked this path, and there is a way to find balance and contentment – embrace your innate qualities of the pursuit of success, be sure you have a clear vision and embrace the high achiever mindset, it will ensure you are on a path to a fulfilled, profound, and prosperous life.

Wishing you a life of balance, contentment, and fulfillment.

Be well and enjoy the moments,

Derek Henderson