Blog

Wouldn’t be so easy to just get in and out when the news on the street says it is about time to do so.  If you go back a few weeks, and even a few months, you can see that the bearish sentiment was already on and yet, the markets have continued to rise.  Please do yourself a favour and read this analysis outlined by Ed Rempel in the Million Dollar Journey blog. 

In a nutshell, history has showed us that the market has been up much more often then down.  Since 1950, the S&P 500 has gone up 48 times and down 15 times of which only 3 times were down a lot i.e. more than 20% drops.   So, 76% of the time, in that 63 year period, the market was up. “The difficulty in correctly predicting a bear market, getting the timing right, and not missing out on all the up years, is why, in general, it is best to be a “buy and hold” investor. The key to successful stock market investing is to be fully invested during the 76% of years that are gains. The stock market has very reliably produced large gains long term. If you invested $1,000 in 1950, you would have $749,330 today (1). “Buy and hold” investors can get the long term gains of the stock market. Market timers are far more likely to get lower returns” – Ed Rempel 

So, that is why we advocate to simply buy and hold. It is much safer to buy quality investments, be diversified, and hold to participate in all of the up years rather than second guess and risk to be out when the market either rally or continue to rise.

Here is the full article which is worth reading in full.

(1) Standard & Poor’s

1. Selling low:  don’t let the emotion in the way.  When the markets tank, remember that the psychological impulse is to react.  Be rational and stay the course with your sound investment plan.
2. Buying high: buying only when things are going well is also a mistake.  The psychological reaction this time is euphoria and impulse to make bold investments. Make sure to invest regularly, to take advantage to the dips and soften the peaks.
3. Taking too much risk:  Invariably, investors feel confident when the markets are up and feel comfortable with high risk investments. High risk does not always equate high returns. It actually means that you have to be more tolerant to big swings.  Match your investments to your true risk tolerance and that will be just fine in any markets.
4. Trading too much: Switching investment strategy too often
5. Trying to look rich: this is my favorite!  Don’t try to look as rich as you wealthy friends.  Live within your means and look smart.

“In An Election One Needs Both Hope and Audacity” -Francois Hollande

TSX RISES

The Toronto Stock Exchange climbed higher and the Canadian dollar fell Friday as Statistics Canada reported that consumer prices rose last month at the slowest rate in more than three years.
The S&P/TSX composite index rose 105 points 12,613. The loonie fell more than 0.60 cents to 97.30 cents US after the federal agency said Canada’s annual inflation rate dipped six-tenths of a point to 0.4 per cent.

Statistics Canada said there was also an outward decline month-to-month, with prices dropping 0.4 per cent from March, largely due to falling gasoline prices.  The Dow Jones industrial futures was ahead by 121 points to 15,34, the S&P 500 index jumped 15 points to 1,666, while the Nasdaq climbed 33 points to 3,498. Meanwhile, gold prices continued to pull back. June gold bullion dropped $31.40 to US$1,355 an ounce, down nearly five per cent this week. On Wednesday, it had closed under $1,400 an ounce for the first time in a month.

Reasons Why China Will Rebound

China’s economy bottomed out over the past six months and as a result, the country is facing a brighter future, says Raymond Chan, chief investment officer of Hamon Investment Group in Hong Kong. “We think growth will continue on a slightly upward bias – plus or minus 8%,” he says. “We don’t [forecast] any dip in the economy like we did last year.” There are several reasons for his optimism.   China’s exports are improving (largely driven by a healthier U.S. economy).  The rest of Asia is booming and new leadership is targeting reforms. China welcomed new political leaders in March 2013. These officials have been focused on the reforms originally introduced by their predecessors, which includes changes to healthcare, property taxes and the country’s financial sector. “Reforms that have been relatively slow for the last two or three years have to accelerate,” he says. “We think the new leadership won’t — and cannot — wait for another year or two to accelerate reforms.” And that’s good news for foreign investors. The new government is targeting growth at 7.5% for the next five years, adds Chan.

Market Update as of May 17 2013

The TSX closed at 12613, up 24 points or 0.19% over the past week. YTD the TSX is up 0.57%.
The DOW closed at 15354, up 236 points or 1.56% over the past week.YTD the DOW is up 17.17%.
The S&P closed at 1667, up 33 points or 2.02% over the past week.YTD the S&P is up 16.90%.
The Nasdaq closed at 3499, up 62 points or 1.80% over the past week.YTD the Nasdaq is up 13.20%.
Gold closed at 1357, down -89.00 points or -6.15% over the past week.YTD gold is down -19.23%.
Oil closed at 95.98, up 0.11 points or 0.11% over the past week.YTD oil is up 3.68%.
The USD/CAD closed at 1.0278, up 0.0174 points or 1.72% over the past week.YTD the USD/CAD is up 4.07%.

Sources: Bloomberg; Investment Executive; advisor.ca

“Win or Lose, We Go Shopping After the Election” -Imelda Marcos

Markets Close Higher

North American markets capped off a mostly positive week higher Friday despite a continuing retreat in commodity prices. The S&P/TSX composite index was up 45.19 points to 12,589.09. The Canadian dollar lost 0.41 of a cent to 98.85 cents US. Statistics Canada reported April’s unemployment rate was unchanged at 7.2 %, as the economy added 12,500 new jobs. On Wall Street, the Dow Jones industrials index jumped 35.71 points to 15,118.33, while the Nasdaq climbed 27.41 points to 3,436.58. The S&P 500 gained 7.02 points to 1,633.69.  Meanwhile, commodities continue to fall. The June crude oil contract declined 35 cents to US$96.04 a barrel, June gold bullion fell $32 to US$1,436.60 an ounce and July copper was up a penny at US$3.35 a pound.

Canada Adds 12,500 Jobs

Canada’s economy managed to eke out a meagre 12,500 net new jobs in April, but the fact that all of them were full-time brought solace to a labour force outlook that has turned sour of late. The small pickup last month helped take the sting out of March’s massive 54,500 contraction and kept the unemployment rate steady at 7.2 %. However, it was not enough to put job creation on the positive side of the ledger for 2013 as a whole. In the first four months of the year, Canada has seen a net loss of about 13,000 workers. Statistics Canada said that for the past 12 months, employment has increased by only 163,000, a rate of growth of less than one per cent. All the gains came in the form of new employees, rather than self-employment, and the 36,000 increase in full-time work — while most were in the public sector — is a relatively strong result.

Market Update as of May 10 2013

The TSX closed at 12589, up 106 points or 0.85% over the past week. YTD the TSX is up 0.38%.
The DOW closed at 15118, up 144 points or 0.96% over the past week.YTD the DOW is up 15.37%.

The S&P closed at 1634, up 20 points or 1.24% over the past week.YTD the S&P is up 14.59%.

The Nasdaq closed at 3437, up 58 points or 1.72% over the past week.YTD the Nasdaq is up 11.19%.

Gold closed at 1446, down -20.00 points or -1.36% over the past week.YTD gold is down -13.93%.

Oil closed at 95.87, up 0.40 points or 0.42% over the past week.YTD oil is up 3.56%.

The USD/CAD closed at 1.0104, up 0.0022 points or 0.22% over the past week.YTD the USD/CAD is up 2.31%.

Sources: Bloomberg; Investment Executive; advisor.ca

A new amendment under N1-31-103 of the Canadian Securities Administrators will include enhancements to account statements and client disclosure.

Investors can expect new cost disclosure that includes:

• at account opening, what product and service costs they can expect to pay;
• at the time of a transaction, the transaction cost and any deferred cost; and,
• annually, a summary in dollar terms of what they were charged and any other fees paid to the firm, such as trailing commissions and commissions on trades.

Investors can expect a new annual investment performance report that includes:

• how much they have contributed and what it is worth as of the report date;
• deposits and withdrawals for the past year and since their account was opened; and,
• percentage returns for their account over one, three, five and 10 years and since it was opened.

The amendments will take effect on July 15, 2013.

We at YOU FIRST / FundEX Investments welcome the news.  Transparency makes for better adviser client relationships. Clients will soon be able to see whether their bank or independent adviser is providing the level of Investment and financial planning advice that justifies the fee they earn. We look forward to gain much market share as a result!