A bit of this and that: Tax Season, Market Update & Annual Reviews

March 08, 2023 | Joanne Livingston


Tax Season

The first quarter of 2023 is rapidly coming to a close and with it the winding down of RSP deposits, transfers to TFSAs, and the RESP activity associated with the winter term. Next up…tax season! This can be a time of year when everything seems overwhelming. Collecting wayward envelopes and searching out tax receipts can take an outsized amount of patience. Please remember that we can help. Isabel and Jenny are a call or email away, and are happy to send out documents and answer questions for you and your tax professionals.

Market Updates

The muddy economic outlook that we talked about in our year-end comments really remains just as muddy. While Canada has suggested that it will pause on rate increases, the Feds are still on high alert and contemplating the size of their next move up. Historically, that has resulted in the Canadian dollar trending lower (against the US dollar). This amounts to about 1% year-to-date but we would expect the exchange rate to widen further if Canada does not keep pace with US interest rates. Equity markets tend to be volatile when constantly looking for clues as to the short-term direction of the market. It is really this that I think deserves our attention at the moment.

“The stock market is a yo-yo but businesses aren’t,” said Mr. Warren Buffet in his 2023 annual letter released in February. We own publicly traded businesses based on our expectation that they will perform well in the long-term…and ideally pay us a reasonable income while we wait. In reality, the fundamental value of a business does not change that much over the course of a year so there can be some certainty when it comes to dividends and capital preservation of these large, liquid corporations. The activity that will bring the best long-term results is managing the Investment Policy to ensure that we are adequately exposed to the asset classes and sectors that meet the long-term goals. It may well be that “efficient” markets only exist in textbooks. It is necessary for part of our allocation to be liquid or flexible. When pricing is oddly too high or too low in any one allocation, we can maintain the balance by either adding into or partially selling an asset class or position. A good example of that has been the recent move of a portion of our liquid or flexible assets into long bonds and preferred shares to the benefit of the longer term portfolio. The prices of these asset classes did not reflect their true long-term value, creating an opportunity for us to buy.

Annual Reviews

Managing effective Investment Policies is directly related to managing solid Financial Plans. As always, we ensure that the assets that you rely on are monitored and modeled to provide you with the income and results you expect. Updating the plan annually is the best way to ensure that this remains the case. Please watch for Jenny’s invitation to join us for your annual review. These requests typically arrive one year from your previous full review but we are always happy to make changes to better fit your schedule.

As always we encourage you to reach out with questions and comments.

Livingston Wealth Management Group