If you had been stranded on a desert island on January 1st of this year and were rescued yesterday, I bet one of the first things you would want to catch up on is how your portfolio has been doing. When you looked, you would note that you are about flat or up somewhat year to date. You would probably consider that as not unusual but that’s only because you were mercifully shielded from the outside world and all the turmoil in the markets for the first 5 months of the year.
If you would have preferred being stranded on a desert island so you didn’t have to see all the headlines in the last five months, I really don’t blame you. Perhaps your biggest problem on a desert island is figuring out how to open that coconut for breakfast! For my part, I have not found this time to be overly stressful. I have seen a lot of volatility in the markets in the last 30 years and although I’m not immune to it, I certainly have a different perspective with so much experience under my belt. The analogy I like to give – crude as it is – is to compare a market downturn to watching a horror movie. The first time you see it, it is really scary. The second time you watch, not so much. In fact, the more you watch it, the less scary it gets. I happen to love scary movies and my clients know that I also love market downturns because they almost always present us with great buying opportunities.
During times like these, I am extremely focused on taking in as much as I can but I learned a long time ago that I had to be selective and discerning about where I get my news and information. I can tell you sincerely that I cannot remember the last time I watched CNN, MSNBC or Fox News. For my purposes and for the purposes of my clients and managing their portfolios, I don’t believe it would add any value whatsoever to what I do for you. I also know that watching the main stream news would do nothing but raise my blood pressure. I get all of my news and information about markets from economists, portfolio managers, research analysts and some excellent podcasts that I listen to. And to make sure I am not letting any biases creep into my thinking, I deliberately seek out opposing views to get the broadest range of opinions possible.
Looking ahead, I am not sure what the short term will bring us. My sense is that with the US trade court’s recent decision that most of the tariffs that have been imposed by the US administration are illegal and with an economy that appears to be slowing, now is not the time to take our eye off the ball. My strong sense is that with the US midterm elections being just a year away come this fall, the political pressure on the administration will be such that it may speed up any resolution to this uncertainty. I have positioned my clients’ portfolios to take advantage of any upside we might see but also to protect if the market turns down again. And all I really know for sure is that if the market goes down, it will eventually come back up and I will try to take advantage of it.
I will leave you with one example of where I get the news and information that guides my thinking. The link below will take you to a recent podcast with Stu Kedwell, a portfolio manager with RBC Global Asset Management. He does an excellent job of reviewing where we’ve been, where the opportunities and risks are going forward and the extraordinary benefits of dollar cost averaging as a way to invest your money.
Opportunities and risks in a shifting Canadian market
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