If you’re like me, every year on September 11, you pause to reflect on one of the worst terror attacks of our lifetime. It is unfathomable to me that next year will be the 25th anniversary of the 9/11 attacks. I remember so clearly, still, where I was and what I was doing when I found out. I was in New York a couple years ago and we took a guided tour of the 9/11 Memorial and went to the 9/11 Museum. If you haven’t done it, I highly recommend it. It is both sombre and uplifting at the same time. And whether you like musicals or not, if you ever have the chance to go see “Come From Away”, the story of how the citizens of Gander, Newfoundland took in thousands of passengers from planes redirected there on that tragic day. It will inspire you and make you immensely proud to be a Canadian.
There is a theatre group in Saint John, NB that is currently putting on a production of this musical and it runs until this Saturday, September 14th. It might be too late to get tickets but just in case, here is the link: COME FROM AWAY - Saint John Theatre Company
A lot of my memories from around that time are associated with what was going on in the markets. The market peaked on March 24, 2000 and bottomed on October 9, 2002 for a total drop of nearly 50%. What made this bear market particularly painful was that it lasted 31 months. I remember very clearly clients expressing their concern that there was no end in sight and their reluctance to buy stocks. I was of the view that sentiment was so bad that it was probably an excellent buying opportunity. It turned out to be a phenomenal one and it was a tremendous lesson for me that has served me (and my clients) incredibly well in subsequent bear markets including the Great Financial Crisis and the Covid Pandemic. I look forward to bear markets now because they are always the best times to invest.
I know many people are surprised that despite the turmoil that arose from tariff uncertainty and the seemingly endless stream of negative news headlines, the market is having a pretty good year. I’m not surprised for several reasons. First, the volatility we saw in March and April was simply not sustainable and when the US administration saw this, they seemed to back off. Second, there are other factors that are being very supportive of the market including US Government fiscal stimulus, an enormous amount of capital spending particularly in the area of artificial intelligence and the prospect of interest rate cuts from the Federal Reserve starting next week. While I am keenly aware that we could encounter renewed market volatility at any time, I am cautiously optimistic that this market rise continues into year end.
The other important point is this: I truly believe that while we will continue to see market volatility as a matter of course, I think we have entered into an era where market downturns and recoveries will happen much quicker than in the past. Part of this is the fact that news flow is instantaneous now and everybody has access to it and can react accordingly. The other factor is that investors, including retail ones, are much more sophisticated than they were 25 years ago so market turmoil will likely be met with more rational actions. A good example of this is the US bombing of Iran nuclear facilities a few months ago barely nudged oil prices. In the past, this likely would have caused much more price movement than what we saw this year.
I will be Toronto next week from an investment conference I attend every year. It is one that I always look forward to because I will get to hear the latest views from some of the best money managers in North America. I look forward to sharing with you what I learn when I get back. In the meantime, please don’t hesitate to reach out if you have any questions.