To my valued friends and clients,
I hope that you are taking some time to spend with your friends and families. I have been taking a bit of downtown as well this summer for a change of pace. With that said, I am still focused as ever and I thought that now would be a good time to bring you up to speed on what’s been moving the markets recently. (& subsequently, boosting your investment account’s rates of return!)
Here’s a summary of the last 1-2 months’ worth of notable market-moving events. I end this version of “Adam’s Thoughts” with a recap on “Risk-Adjusted Returns” and how that’s the secret to top-shelf investment performance.
COVID-19 and market developments
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After mid-month jitters over inflation and the Delta variant, the U.S., Canadian and global markets rebounded and posted a sixth straight month of gains.
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Approximately a third of S&P 500 listed companies and a fifth of TSX listed companies reported strong corporate earnings, including some of the biggest tech names.
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Treasury yields fell slightly on positive market data and economic reassurances from the US Federal Reserve (the Fed).
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The US Fed left U.S. interest rates in the 0 to 0.25% range and said it would continue buying Treasuries and mortgage-backed securities to stimulate borrowing and spending. U.S. inflation jumped 5.4%, the highest level in 13 years, but the Fed explained this increase was temporarily driven mainly by supply chain disruptions and rising consumer demand as pandemic-related restrictions are lifted.
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The Bank of Canada also held interest rates at 0.25% but announced a scaling back of its stimulus by reducing government bond purchases. The bank added it is letting inflation temporarily rise above its 2% target but if higher prices do not subside as the economy recovers, it will intervene.
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The U.K.’s Freedom Day, celebrating the reopening of its economy, went ahead on July 19. Developments in the U.K. are seen as a potential leading marker for the reopening of other western economies.
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The Canadian federal government unveiled a roadmap to open its borders again. On August 9, vaccinated Americans will be allowed to visit and from Sept 7, vaccinated travellers from other countries.
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Ontario, Alberta & Manitoba have now both moved to stage 3 of its reopening plan with restrictions lifted on businesses and public gatherings with capacity limits.
How does this affect my investments?
We are beginning to transition from a central bank-assisted recovery to a more self-sustained growth recovery. It’s natural that we might experience some short-term volatility as we enter this new phase.
However, normal economic activity should resume and expand throughout the remainder of the year. The pace of growth will likely be slower but this is understandable as we are coming off a record-breaking 12 months of market performance. This record-breaking out-performance was due in large part to the fact that we went from being closed down back in the Summer of 2020 to a continent full of people with incomes, stimulus money & a healthy willingness to spend!
Regardless of where we are in the market cycle, it’s important to take a disciplined approach to investing and stay focused on your long-term financial goals. I recommend you maintain a diversified mix of asset classes in your portfolio to maximize potential returns and minimize risk. Regularly reviewing and rebalancing your portfolio also helps you remain on track.
Over the coming weeks, I will be sending out some individual emails to you encouraging you to review your portfolios and contact me if you’re interested in meeting. Take this letter as an initial reminder that I am always happy to discuss your investment needs with you and it’s never a bad time to take 15-30 minutes, (at least) to speak with me to make sure that your investment plan is on track.
We continue to be on an incredible roll in terms of our account’s performance. I am very thankful and grateful for the fact that you continue to trust me with your hard-earned money and I am going to continue to work hard to deliver you strong & consistent, “risk-adjusted returns” as time goes by. After all, that’s where the magic lies. It’s not just in “good returns.” Rather, the most satisfying results that I can deliver happen when I am delivering a great rate of return in terms of % all the while keeping your risk firmly in check. That’s the secret to long-term investment prosperity. Minimize the risk while maximizing the returns…. It may sound easy, but it’s a daily challenge! The fact that we haven’t been making too many switches throughout the first 7-8 months of this year means that I feel as though we are already properly positioned for whatever comes next in the market. It’s a great feeling to have from an advisory perspective. I am cautiously optimistic that the final 4-5 months of this year will continue to provide us returns in line with the first 7-8 months of the year. if that plays out we will be able to look back at 2021 as another incredible success. Time will tell!
I am here to support you in achieving your financial goals. Please do not hesitate to contact me with any questions, comments or concerns.
Sincerely,
Adam Aleshka
The information in this letter is derived from various sources, including CI Global Asset Management, Globe and Mail, National Post, Wall Street Journal, Bloomberg, Investment Executive, Advisor’s Edge, Bank of Canada and Statistics Canada at various dates. This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources and reasonable steps have been taken to ensure their accuracy. Market conditions may change which may impact the information contained in this document. Before acting on any of the above, please contact me for individual financial advice based on your personal circumstances.
