Independent Thinking
Working For You.

Looking Back to Move Forward

October 13, 2020

Looking Back to Move Forward

We are now past the end of the third quarter in what continues to be an eventful year for not only our health, but financial markets and the economy as well. In light of all that investors have been through, we thought it might be worthwhile to briefly summarize where we’ve been this year and the prospects for the period ahead – and also to highlight some lessons we are consistently reminded of as investors. 

Where we’ve been

In mid-March, listening to the news it may have felt like the world might be coming to an end – talk of a return to a Great Depression like economy dominated television and social media. Understandably, financial fear was rampant – and stocks responded to these nightmarish scenarios by hitting the lowest levels in years.

Although no one knew it at the time, that turned out to be the stock market bottom. Since then, we’ve seen the economy move back from the abyss and as a result, we’ve had a strong recovery in markets from their bottom at the end of March.

Here are a few lessons from the last twelve months:

  1. We were reminded of just how volatile stocks can be and the importance of true diversification and proper asset allocation in an investment plan.
  2. We have learned that re-acting to the media is a recipe for disaster.  A Financial Advisor should help you maintain patience and faith in the future. Quality investments have provided success to long-term investors and it is no different this time around.
  3.  Investors were also reminded of the need to focus on what they can control – That is to understand cash needs and then apply appropriate asset allocation to fund those needs.  This is key to a successful investment plan.
  4. Finally, we were reminded that in today’s world, we need to expect the unexpected.  Although events always change; the driving forces behind financial markets (Fear and Greed) remain intact.  Advisors and Investors who can manage their emotions will continue to be successful over an investing lifetime.   

The outlook going forward

A year ago, investor behavior was characterized by rampant optimism. The North American markets had hit new highs and any concerns were set aside as minor annoyances.  By contrast, six months ago the market was overwhelmed by absolute pessimism.

Today, the market is somewhere between those two extremes and many investors can be characterized as cautiously nervous, highlighting the importance of a trusted financial advisor to help develop and implement an investment plan.

As a general rule, a certain level of healthy anxiety is positive – what gets investors in trouble is an excess of either optimism or pessimism. The good news is that there are still excellent opportunities for investors who are prepared for short term volatility.  Most investment managers say they are still finding very good value – not to the extent that they did earlier this year, but still well ahead of what they would have seen a year ago.  There are also a number of reasons to be optimistic on the future. We live in a world that is rapidly becoming more free, clean, healthy and peaceful. Humans innate ability to problem solve and innovate has seen the world continue to become a more efficient place, with global income levels and life expectancy continually on the rise.

Let us close by talking about volatility in your investment plan;

In 1907, U.S. financier J. Pierpoint Morgan singlehandedly averted a banking panic among U.S. investors.  Later in life, someone asked him his best guess on the direction of financial markets. His answer: “They will go up and they will go down.”

Over one hundred years later, that’s still the best answer to someone looking for a short-term market forecast. As Financial Planners and Advisors in Cornwall and surrounding area, we strive to help educate our clients that while some financial headlines may sound convincing, no one can truly predict market movements in the immediate period ahead – all we can do is understand clearly how much short-term volatility we can live with, adjust our investment plan accordingly, and stay focused on the horizon as we deal with the rough waters. No one likes volatility … but for most of us it’s the necessary price to arrive at our ultimate destination.

Source: https://www.paultrudgian.co.uk/supply-chains-2019/

It is our strong belief that to be successful in reaching your goals it is necessary to have a plan in place and to follow a process. That is, to make your life and financial decisions not by accident but by design.

Remember, successful people ACT towards the future they want!

Recent Posts

Slow & Steady Wins the Race

In North America, the majority of investors get their financial market updates from television and news media sources. Inevitably, that means over the past couple weeks your morning headlines (which...

read more

Crazy Time – Crazy Charts

It is a crazy time right now with wars, record fuel prices, supply shortages, rising interest rates, and the most overvalued housing market in the world (to name a few!). We could write paragraphs on how each of these would impact (or ultimately not impact!) your investments over the long-term, but instead, we thought this article did a great job of summing up some of the craziest charts out there right now. The link to the full article is below, however, we’ve summed it up here and added our comments to each item.

read more

Our Clients

Their honesty and customer service is right up there, with the knowledge and recommendations on where investments should be made. When it’s time for a change Tim is always honest with us on where any changes should be made.

Janet McDonald

To me, it is their personalized service. When something happens, you can go in and discuss your options. The whole team knows your plans, listens to your needs, and can help you make adjustments.

Richard Dumoulin

They are very courteous, friendly and find them very professional. They are good at taking care of time sensitive matters and you get a general sense of being taken care of.

Ginny Blair

The fact they take time to discuss with you their knowledge base, they give you all the options then give you their opinion and let YOU make the final decision.

Elisabeth 

Their integrity and 1-on-1 communication skills, always personable. Tim and his team make you feel comfortable no matter how much you are investing.

James