Happy New Year!   
And welcome to the January 2020 issue of Marche Monthly.  Let's start by looking back briefly on the decade that was. 
 
WHAT’S THE MOST SIGNIFICANT INVESTING TREND OF THE PAST DECADE?
Here’s what I think it is: that a new generation of investors is being groomed to not think.
 
To not put in the effort. To not do any homework on the companies they own.
 
Outsourcing one’s thinking is the most significant investing trend of the past decade, and I think it has dangerous implications for the next one.
 
This new generation of investors, mostly younger people and those with smaller portfolio sizes, are investing passively – into index funds and exchange-traded funds (ETFs), which closely track indexes such as the S&P 500, Dow Jones Industrial Average and S&P/TSX Composite Index. In other words, they are essentially buying the entire market.
 
Robo-advisors are a key driver of the non-thinking trend. Robo-advising is a cookie-cutter method of managing money, in which the robo-advisor charges 0.5% of your assets to annually put you through a digital questionnaire of your investing preferences. Then they put you into funds that have fees of perhaps 0.2%. What happens is that investors end up owning the whole market – including volatile companies in copper, oil and gas and commodities – which to me is a lot riskier than owning a portfolio of high quality, blue chip, dividend-paying companies like we do.
 
THIS MAY SURPRISE YOU
Here’s a fact that, if you’re one of our clients, may surprise you: over the past decade, the TSX delivered an average annual gain of just 3.9%. Sounds quite low, right?
 
That’s because you don’t own the market, but a portfolio custom-made for you, and driven by your objectives as found in the unique financial plan we developed with you. Since you don’t own the market (index funds and ETFs, in other words), but instead those high quality, blue chip, dividend-paying companies I referred to above, over time this should lead to above-average returns, with you incurring less risk than people who do own the market.
 
In all of this, your financial plan – because it clearly articulates your objectives and thus is the basis of your custom-made portfolio – is absolutely crucial. So, as we move forward into the 2020s, every year we will continue to do what we have always done: carefully review your financial plan, and revise it only if there is a material change in your circumstances.
 
SOME THINGS CHANGE. OTHERS NEVER DO.
As the decade begins, we remain in the longest bull market in history. It began in 2009, after the financial crisis.
 
But of course, it can’t last forever.
 
So I don’t think it’s realistic to expect the same returns in the 20s as we enjoyed in the 10s. Thus it will be more important than ever to own the right businesses and keep what you can after tax, which we will ensure through prudent planning and portfolio management.
 
But some things never change. Regardless of what this new decade brings, we see a very positive outlook for the businesses we own in our client portfolios. We are confident that these will continue to thrive and prosper in any environment and that we are well-positioned to capitalize on opportunities that will arise due to volatility that will inevitably occur, allowing us to buy high-quality companies for our portfolios at sale prices.
 
Happy 2020! We look forward to serving you over the next year, the next decade, and beyond.
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Want to discuss any aspect of this month’s blog, or any other issue on your mind? Have a story idea? I am always happy to receive your call, email or visit.

Tyler Marche, MBA, CFP, FCSI
Your life, uncomplicated
tyler.marche@rbc.com
1-416-974-4810
www.tylermarche.com