Category Archives: Investments

Odette Morin
Terry Broaders

Weekly Update February 3 2017

“In Three Words I Can Sum Up Everything I’ve Learned About Life: It Goes On” -Robert Frost

Financials Sector Boosts North American Markets

North American stock markets finished Friday on a positive note, led by financial companies as U.S. President Donald Trump prepared to scale back regulations affecting the sector. Toronto’s S&P/TSX composite index climbed 77.28 points at 15,476.39, with the financials sector up 0.8%. South of the border, the Dow Jones industrial average added 186.55 points at 20,071.46 and the S&P 500 climbed 16.57 points at 2,297.42. The Nasdaq composite gained 30.57 points at 5,666.77, a new all-time high. Michael Currie, a vice-president and investment adviser at TD Wealth, says the financials sector benefited from Trump’s first steps aimed at loosening regulations affecting the industry. Trump signed an executive order directing the Treasury Secretary to explore potential changes to the Dodd-Frank law, which was implemented after the global financial crisis of 2008-09. “The most regulated sector of the market is financials, so every time we hear about regulations being cut it tends to favour them the most,” Currie said.

U.S. stocks also got a boost from a better-than-expected jobs report. The U.S. Labor Department reported that employers added 227,000 jobs last month — more than last year’s average monthly gain of 187,000.
The Canadian dollar was at US76.76¢, down 0.04 of a U.S. cent from Thursday’s close. “It’s been trading in the 70s for a while,” Currie said. “As we get closer to 80, Canada starts to get a little bit more worried. It makes us a little less competitive when we’re up close to the 80-cent mark.”


Trudeau Rules Out Tax On Health Benefits

Prime Minister Justin Trudeau has ruled out a tax on health and dental benefits in the upcoming federal budget. Addressing interim Conservative Leader Rona Ambrose at Question Period on Wednesday, the prime minister refuted that such a levy would be introduced. “We are committed to protecting the middle class from increased taxes and that is why we will not be raising the taxes,” he said. In addition, and contrary to months of speculation regarding the proposed benefits tax, Trudeau stated this was never under consideration by his government. Responding to Conservative MP Denis Lebel, who asked would there be a “new tax on dental and health care?” the prime minister countered that: “It was never in our plan to increase taxes as suggested by the member.” The denial came just hours after Minister of Finance Bill Morneau had told reporters: “We are not going to talk about budget measures in advance of the upcoming budget.”

The prime minister’s comments will come as welcome news to Canada’s 13.5 million workers that have health or dental coverage, as well as the “Don’t Tax my Health Benefits!” campaign. Part of that group is the Canadian Life and Health Insurance Association (CLHIA), which responded to the government’s apparent volte-face. “We fully support the decision to maintain the current tax treatment of employer health benefits that over 22 million Canadians rely on for their healthcare needs,” said Stephen Frank, SVP, Policy, CLHIA.


North America
The TSX closed at 15476, down -100 points or -0.64% over the past week. YTD the TSX is up 1.30%.
The DOW closed at 20072, down -22 points or -0.11% over the past week.YTD the DOW is up 1.56%.
The S&P closed at 2297, up 2 points or 0.09% over the past week.YTD the S&P is up 2.59%.
The Nasdaq closed at 5667, up 6 points or 0.11% over the past week.YTD the Nasdaq is up 5.28%.
Gold closed at 1222, up -7.00 points or 2.35% over the past week.YTD gold is up 7.38%.
Oil closed at 53.85, up 0.65 points or 1.22% over the past week.YTD oil is up 3.12%.
The USD/CAD closed at 0.767, up 0.0064 points or 0.84% over the past week.YTD the USD/CAD is up 3.38%.

The MSCI closed at 1795, down -9 points or -0.50% over the past week. YTD the MSCI is up 2.40%.
The Euro Stoxx 50 closed at 3273, down -30 points or -0.91% over the past week.YTD the Euro Stoxx 50 is down -0.55%.
The FTSE closed at 7188, up 3 points or 0.04% over the past week.YTD the FTSE is up 0.63%.
The CAC closed at 4825, down -15 points or -0.31% over the past week.YTD the CAC is down -0.76%.
DAX closed at 11652, down -162.00 points or -1.37% over the past week.YTD DAX is up 1.49%.
Nikkei closed at 18918, down -549.00 points or -2.82% over the past week.YTD Nikkei is down -1.03%.
The Shanghai closed at 3140, down -19.0000 points or -0.60% over the past week.YTD the Shanghai is up 1.16%.


Sources: Bloomberg; Investment Executive;

Anthony Sabti

2016 Market Review & Key Themes for 2017

2016 was the year of surprises.  There were a number of unexpected political outcomes throughout the year, namely the “Brexit” vote, Donald Trump winning the U.S. presidential election and OPEC members reaching a deal to reduce oil production.

But perhaps the biggest surprise was stock markets themselves.  After the worst 10-day start in history and a January that saw 93% of investors lose money, both Canadian and U.S. markets finished the year with healthy double digit returns.  The Canadian index, represented by the TSX finished up 17.62%. The Dow Jones Industrial Index (DOW) in the U.S. set new highs and almost reached the 20,000 point mark.  It finished the year up 13.42%.  The Global Index, represented by the MSCI world, finished the year up 5.41%

What happened in 2016 serves as a reminder to investors to ignore the “noise”, take a long-term approach, and remember the importance of investing in a high quality and diversified portfolio.

Key Themes for 2017

We expect two key themes to emerge in 2017:  Improved U.S. Growth and Bond/Equity Divergence.

Economic indicators in the U.S. strengthened in the second half of 2016, confirmed by a Gross Domestic Product (GDP) number of 3.5% and a projected 2.0% pace in the 4th quarter, which comfortably exceeds the ceiling for U.S. economic growth.  The Republican administration’s planned policies are also expected to accelerate economic growth in the U.S.  Overall there is renewed faith in the longevity of the U.S. recovery.

The second key theme for 2017 is likely to be a continued divergence between equity and bond returns. For thirty years equity and bond returns have been positively correlated in that falling interest rates have benefitted equities and bonds. That has changed since the U.S. election on November 8th. Since the election, U.S. equities have rallied sharply in anticipation of stronger economic growth and its causal linkage to stronger corporate earnings while U.S. bond returns have been very soft. Bond returns have been weak because investors fear that fiscal stimulus will cause inflation to move upward.

Equity Outlook

As mentioned above, the Republican administration’s planned fiscal stimulus is expected to accelerate economic growth in the U.S.  Stronger economic growth and higher inflation should be beneficial for revenue growth, and proposed corporate tax cuts would provide a meaningful boost to corporate earnings. Because of all these possible measures, we continue to be biased towards U.S. equities.

Several Canadian companies should benefit from the strengthening of the U.S. economy in 2017. However, with weak commodity prices and Canadian economic growth and inflation expected to remain modest, Canadian equities are likely to underperform their U.S. counterparts in 2017.

Equities in some European countries are attractively valued but because of persistently low growth, inflation, high unemployment, and growing uncertainty about the future of the euro, we recommend an underweight position in international and emerging market equities.

Fixed-Income Outlook

During the first part of 2016, bond prices increased due to weak economic growth and inflation. However, as central banks’ monetary policies appeared to have peaked and it seemed that governments would have to begin implementing their own fiscal stimulus, bond prices decreased in the second half of the year.

While domestic and global government bonds can offer stability and diversification benefits, overall returns are expected to be low. Thus, most bond managers are underweight government bonds.  They may simply decide to hold cash instead and maintain a neutral weighting in investment grade bonds based on the slightly higher yields they offer over governments.

The consensus is that the Bank of Canada will hold its key interest rate steady for some time to come and that the U.S. Federal Reserve Board will modestly increase the federal funds rate over 2017.  This will likely keep short-term rates low, but U.S. fiscal stimulus may push longer yields modestly higher.

This will help keep the Canadian dollar remain low for an extended period.  The U.S. dollar is expected to drive higher due to higher growth and inflation in the U.S.


Although 2016’s surprises created volatility and uncertainty in the capital markets, they also created opportunities for experienced investors, and will continue to do so in the coming year.

We continue to recommend a diversified portfolio that is tailored to your individual investment objectives to take advantage of opportunities as they arise, while protecting your investments from further volatility.

On behalf of the entire You First team, we would like to wish you and your family all the best for the year ahead, and to remind you that my team and I are just an e-mail or phone call away should you wish to discuss your investment portfolio in greater detail.


Frank Mueller

Understanding Your Account’s Performance

Price Per Unit, Net Invested, Book Value, Market Value, Net Asset Value, and Adjusted Cost Base are some of the terms you may come across on your statement. People commonly struggle at times to understand the different “values” that are listed on their portfolio statements. This terminology confusion makes it very difficult to look at your statement and determine how the portfolio is really doing.

Understanding how your portfolio, and the funds within the portfolio, is doing will allow you to make better investment decisions going forward. Let’s investigate this a bit further.


Price Per Unit, or Net Asset Value Per Unit (NAV): This will be listed for individual funds in your portfolio. The Price Per Unit refers to the dollar value of 1 individual unit of the fund in question.

Market Value: Market Value of a fund is simply its current value as of the statement date. If your statement was printed today with today’s date, it would reflect yesterday’s market close unit price. The market value of Jim’s fund of 1,000 units of Fund XYZ with a unit price today of $10.00 NAV = $10,000.

Net Invested: This figure will appear for each fund you hold and for each account. Net Invested is simply the initial investment, plus all contributions, minus all withdrawals. For example: Jim initially invested $10,000 in Fund XYZ, subsequently made $1,000 in contributions, and then withdrew $500. Jim’s Net Invested is therefore his Initial Investment ($10,000) + Subsequent Contribution ($1,000) – Withdrawals ($500) = Net Invested of $10,500.

Adjusted Cost Base (ACB) aka Book Value: Book Value (or ACB) is the initial investment, plus subsequent contributions, plus any reinvested distributions, minus any withdrawals. Using the above example, let’s say that Jim also received $100 in interests/dividends distributions, which he opted to reinvest into XYZ. This Book Value (ACB) is thus his Initial Investment ($10,000) + Subsequent Contribution ($1,000) + Reinvested Distribution ($100) – Withdrawal ($500) = Book Value of $10,600.  This is important for tax purposes in a non-registered account.  When you sell these units, you will pay tax on the Market value minus the Book value.


One common misconception when looking at a statement is to gauge performance by simply taking the Market Value and subtracting Book Value (ACB). This DOES NOT equal performance, and we know this because we’ve already demonstrated above how Book Value differs from Net Invested. How you opt to receive distributions affects your Market Value and Book Cost (or ACB).

As you can see, when calculating the performance on a mutual fund investment it’s important to consider your initial investment, as well as your subsequent contributions and withdrawals or what we call your Net Invested. Let us know if you have questions about your portfolio’s return, as we can explain how your investments are performing, and help you to make the right decisions going forward.

Terry Broaders

Weekly Update December 20 2016

“The Nice Thing About Christmas Is That You Can Make People Forget The Past With A Present” – Anonymous

TSX Rises Wall Street Falls Following Fed Rate Hike

Canada’s benchmark stock index rose on Friday as higher oil prices helped heavyweight energy stocks and gold miners recovered as the price of the precious metal steadied. The Toronto Stock Exchange’s S&P/TSX composite index closed up 33.89 points, or 0.22 per cent, at 15,252.20.  The Canadian dollar closed slipped to trade at 74.88 cents (U.S.).
On Wall Street, U.S. stocks fell on Friday, weighed by a more than 4-per-cent drop in Oracle shares, while recently-battered stocks in the real estate and utilities sectors posted the largest gains. The Dow Jones industrial average fell 8.32 points, or 0.04 per cent, to 19,843.92, unable to move above the 19,900 level. The S&P 500 lost 3.97 points, or 0.18 per cent, to 2,258.06 and the Nasdaq Composite dropped 19.69 points, or 0.36 per cent, to 5,437.16. The dollar and U.S. stocks dipped on Friday, taking a breather after this week’s big moves after the U.S. Federal Reserve signalled a faster pace of U.S. interest rate increases next year. World stocks as measured by the MSCI world equity index, which tracks shares in 46 countries, were up slightly. Oil prices jumped as producers showed signs of adhering to a global deal to reduce output. Brent crude futures were trading at $55.20 per barrel, up 2.2 per cent, while U.S. crude was up 1.8 per cent at $51.83.


Working With A Financial Planner Is Key To Retirement Satisfaction, Study Finds

The vast majority of retired Canadians who have worked with a financial planner for at least a decade are confident they have enough funds to sustain them through retirement, according to a new study from Credential Financial Inc. and Insights West, both based in Vancouver. The report, Canadians on Retirement, finds that 53% of retired Canadians have worked with a financial planner and 77% of individuals within this group are happy with the level of funding they have for their retirement years. In addition, approximately two-thirds (65%) of those who have had the guidance of a financial planner say their retirement is “everything they thought it would be.”
However, there are still a significant percentage (30%) of working Canadians who have not yet set aside any money for retirement, according to the report. “Data further shows this lack of preparation may stem from a belief that working Canadians believe they have longer to plan for retirement than they actually do. Sixty-two per cent of Canadian retirees say they retired earlier than expected,” the report states. In fact, 18% of Canadians are actually working in their retirement years so that they can continue to earn an income and 30% of those in retirement have more debt than they had anticipated.

Sources: Bloomberg; Investment Executive;

Odette Morin

What to expect with Trump as the new US President?

New York, NY USA - July 16, 2016: Donald Trump speaks during introduction Governor Mike Pence as running for vice president at Hilton hotel Midtown Manhattan

After a long and bitter campaign, the Donald Trump Republican party has firmly taken control of Capitol Hill, winning the Presidency, the Senate and the House of Representatives. While portfolio managers were positioned for a Hillary Clinton victory, the markets have been positive to a clear, uncontested election result and a pro-business president.

The market rally that followed the election, was almost as shocking as Trump’s win.  The Dow futures were 700points down as the Trump majority was forming up.  However, U.S. stocks rose sharply at market opening the next day on speculation that Donald Trump and a Republican-controlled Congress will pursue business-friendly policies.  The markets will be watching closely to see how Trump starts putting policy specifics to his broad plans.

President-elect Trump’s policies will be very different from President Obama’s. The primary beneficiaries of the Trump victory will be defence, infrastructure, engineering/construction and more domestically focussed companies. We also expect Trump’s victory to be slightly positive for oil prices.

The markets will be closely watching now for signs that Trump adopts a statesmanlike tone and selects a credible cabinet. . Remember that while Trump is president, he does not have a free reign.  He is constitutionally constrained by congress consisting of the senate and the house of representatives.

We expect higher volatility than normal as we go through the end of the year and into the first quarter. That’s where remaining disciplined with your asset allocation is really important.

Don’t hesitate to contact us should you want to discuss this event as it relates to your portfolio.  Either myself, Terry, Anthony or Frank will be happy to speak with you.

Below are the before and after November 8 election markets numbers.

Nov 8             Nov 10        Percentage Change
TSX             14,656            14,744            +0.60%
Dow Jones  18,332             18,807            +2.59%
S&P 500       2139                2167             +1.31%
Gold            $1247               1258             -1.26%
CDN$          $0.7516USD    $74.22USD     -1.25%