Category Archives: Investments
In Ben Carlson’s book “A Wealth of Common Sense” you can find this chart called Playing the Probabilities, which illustrates the ultimate volatility-killer: a longer time horizon.
What less risks? Stay invested.
TSX REBOUNDS FRIDAY ON STRONG JOBS NUMBERS, OIL SURGE
The S&P/TSX Composite closed the week at 13,396.73, down 0.3% for the week. At a 2.9% gain year-to-date, Toronto’s main index continues to trail only New Zealand’s index – the world’s best 2016 performer.
While down much of the week, a Friday surge, spurred by encouraging jobs numbers and a 6.6% jump in oil, helped the TSX to cut its losses for the week.
Strong Canadian jobs numbers for March posted a stronger-than-expected increase. A potential knock-on effect of this news could be felt on April 13th, if the Bank of Canada decides not to cut rates again. Before the jobs numbers were released, there was speculation of a rate cut happening again with hopes of further economy stimulation.
Oil enjoyed a healthy jump to finish the week, as data from the Energy Information Administration showed a decreasing U.S. production for the 10th time in 11 weeks, as well as decreased crude stockpiles. West Texas Intermediate May futures closed at $39.72USD per barrel, almost a 50% increase from the February lows, while Brent June futures closed at $41.92USD per barrel. A meeting of oil-producing countries, scheduled for April 17th in Doha, is highly anticipated, as an agreement to freeze output would buoy oil’s price further. John Kilduff, partner at New York energy-focused Hedge Fund Again Capital LLC, stated “We’re still hemmed in a range below $40. Breaking through would be very bullish for the market”.
However, many analysts aren’t believers in an extended oil rally, citing Iran’s goal of winning market share, as well as the world total supply surplus as the main reasons not to believe the hype. Without Iran being on board with a supply cut, other producers cutting supply would only lead to a loss in market share to Iran.
SOURCES: Globe Investor
The price of oil just jumped in the past few weeks from its $30 a barrel lows to $41 today Friday March 18 and have taken the equity markets to new highs. Both the TSX and Dow are now in positive territory year-to-date. The Canadian dollars is also up from its 70 cents and flirted with a 77 cents dollar yesterday.
Three main events triggered the recovery from these oversold markets. OPEC agreed on a supply floor, China is doing better than anticipated and the Feds delayed raising interest rates, even hinting that 2 rates hike maybe more in order instead of 4 hikes. This brings hope that the worst may be over and sets the stage for the recovery to continue. Global stocks posted today their longest streak of growth in two years.
Don’t expect too much for returns this year. Growth is very sluggish and any ascent will likely be volatile but we certainly feel more positive for the year ahead.
Should you sell to capture the gain and benefit from the favorable exchange rate? Should you rent it? Beware of the liabilities issues and tax consequences. Great article here on the pros and cons.
When I was in high school, I had a crush on Jean Marc McDreamy. When I’d see him, my heart pounded, my face flushed and my eyes lit up. Then, I’d run in the other direction. To this day, he’d probably only recognize me from the back.
I have the same relationship with Costco. I love it and run from it. The prices are so good I’d load up on food, dog toys and appliances. Then Terry would have to give up his closet space (relationships are filled with compromises!).
Needless to say, I don’t usually encourage bulk spending. But here’s the exception – it’s RRSP time and this year, more than ever, I strongly recommend you buy big.
Stocks are low right now. There’s truly no better time to invest. In fact, Warren Buffet, one of the world’s most successful investors, just invested $1 Billion in oil in a big way. He did this not despite market volatility, but rather because of it. Read about it here.
In his words, “Be fearful when others are greedy and be greedy when others are fearful.” Right now, many investors are fearful. This is the time for you to get greedy.
The market is low right now. It won’t stay that way. It never does. So don’t let irrational emotions sway good judgement. Market recovery comes in bursts. Missing the best few days to act can be devastating on your long-term returns. See why here.
Want to significantly increase your long-term returns? Then invest big in the low equity market for your RRSP this year. Though equity returns can fluctuate in the short term, they can become less volatile in the long term and provide potential for growth.
Still not sure? Then have a look at my previous blog for even more information.
If you don’t take big, calculated risks now then you’re taking a big risk on your retirement later. People make the mistake of thinking they’re safe because they have interest-bearing investments. However, they forget to factor in inflation. Consider the effect inflation has over just one year and then imagine it over several.
Interest-bearing investments aren’t likely to generate the growth you need for a secure retirement, let alone a happy one.
Is that really a risk you want to take?
Instead, I strongly suggest you contribute in a big way to your RRSP this year – now, in fact. You never know when the market will recover. But, you can bet it will. So contact us today and we’ll defer payment until the February 29th deadline.