Category Archives: Investments

Odette Morin

What will your next statement reveal? Will you engage in Market Herding?

Odette’s Market commentary a must read to the end.


You will soon be getting your year-end statement in the mail and will immediately feel a sinking sensation. After a stellar 5 year period of market recovery and expansion, we see ourselves in negative territory over the past 12 months. “Here we go again” is what we’re thinking.

It never feels good to see the market value of your account go down. In fact, it is annoying and worrisome. Most of us will be tempted to react, adjust or capitulate. How quickly do we forget that markets are volatile and eventually correct. So, what do the markets know that we don’t? Or do the markets really know? Should we follow or stay the course? Let me go through a few facts first to help you see the big picture before being tempted to participate in Market Herding meaning if other investors sell, it must be because they know something we don’t. Thus, he sells, she sells, you sell, and so down go stock prices. Read more here.

We strongly feel that the markets around the world are currently oversold especially the North American markets. We predict a turnaround in 2016 & 2017. Beyond the “markets always recover” Here is why we feel confident about the year ahead:

• The CDN dollar is very low right now at about 70 cents compared to the US dollar. Canada is predominately an exporting country. A cheap dollar is great for Canada as it makes our products and services inexpensive. The Bank of Canada’s decision not to increase interest rates was a good one. Our main trading partner and buyer of our products is the US. The US economy is actually doing well which is going to be good for our exports.

• The government stimulus initiated last year will start to show results.

• The new Liberal government infrastructure stimulus will help our economy as well.

• The price of oil is ridiculously low. A steel barrel is currently costing more than the barrel of oil in it. Oil is currently at an irrational valuation. Low prices are the key to the market’s rebalancing, and so the latest drop should help accelerate the adjustment. Oil demand is growing and alternative energy, sadly for our environment, is way too expensive to compete. The challenge right now is that several OPEC members are still boosting their production, with Iran set to add yet more in 2016. This is lengthening the journey back to equilibrium for the oil market. Oil prices should gradually find their way higher with the higher demand.

• Concerns regarding China are reducing. While it is true that Chinese GDP is decelerating, the threat of a hard landing for the Chinese economy still seems fairly small. While a sharper devaluation of the currency is not impossible given significant capital outflows and China’s competitiveness challenges, we continue to believe that any further decline will be modest.

• For your investments, we are getting excited about the medium and long term opportunities that are beginning to reveal themselves with the recent declines. We are bullish for the year ahead. It is in fact a great time to make an investment and certainly great timing for those who will make an RRSP top up before the February 29th deadline.

I will close by simply reminding you that negative events like the market volatility we have been experiencing in the past few months create incredible investment opportunities. These TD Bank’s graphs below confirm this. In the past three decades alone, there have been a number of events that may have kept investors on the sidelines. When you look at the big picture, over the last 30 calendar years, the S&P/TSX Composite Index gained approximately 1316% or 9% per year and 22 of the 30 years had positive returns!

Investors who remained focused, invested and diversified have typically benefitted. The following chart illustrates historical downturns in the Canadian equity market and its subsequent recoveries.

All portfolios are not invested 100% in the stock markets. Your portfolio has mixture of fixed income and equities.

Finally, please read the following article from Oaktree capital. It just shows that the market does not know that much. This is the must read! Thank you for your confidence throughout the years. We work hard to stay on top to offer current recommendations and deliver consistent results.

As Terry and I always say, there is one rule that always works, buy quality and diversify.

Common sense is never as sexy as mass hysteria. MUST Read article here.

TD Graphs




Frank Mueller

Have You Paid Yourself Yet?

Pay me

Bills. We all have them. Mortgage or rent. Cell phone. Internet. Cable. Car loan. The list goes on and on. Bills. They have to be paid, or we lose out on something important to us. Bills. Paying them provides us with the necessities of day-to-day life. Bills. They are seemingly always painful. They are inescapable.

Something else that’s inescapable – and heading toward you faster than you think – is retirement. To many of us, the concept of retirement is somewhat obscure, fuzzy, nebulous; sure, we have a basic idea of what retirement is: the time in our life where we no longer work, and can enjoy our golden years with a nice nest egg that pays us more than enough to cover our base needs, with a little extra so we can enjoy ourselves. But try to be specific. When do YOU plan to retire?

Now, a potentially obvious question you may have is, “How can I take this obscure concept of retirement and turn it into a specific plan”? As a client with us at YOU FIRST, creating this plan is a large part of what we do in your service. We work with you to create a plan that is manageable, is not intimidating, that allows for changes to your life, and that offers room for some rewards to yourself. It is a well-structured road-map, guiding you from today to your destination of retirement and beyond, while avoiding many of the pitfalls that you’ll happen upon along the way.

This brings us back to the beginning of this discussion. One very important “bill” that too few of us keep in mind when balancing our own bankbook is paying ourselves, making sure to follow our road-map and contribute to our RRSP. Consistently putting away money will ensure your nest egg continues to grow. Sure, it’s hard to make that RRSP contribution when you could use that money to do things you want to do today. But try thinking about it like this: every contribution you make into your RRSP is paying yourself at a later date.

It’s no more simple than that. Short-term pain for long-term gain. Of course, there are benefits to contributing to your RRSP: tax relief (and maybe a tax refund), a tax-sheltered haven to grow your money, and ultimately, the satisfaction of knowing you are working for your own benefit instead of just paying seemingly everyone else. So, as the 2015 RRSP Season ramps up toward the February 29th deadline, you may want to ask “Have you paid yourself yet”?

Anthony Sabti

RRSP vs. Mortgage – Where Should I Put My Money?

Hands holding a  piggy bank and a house model

Clients often ask the following question: “Should I use my excess funds to pay down my mortgage, or to contribute to my RRSP?” It’s a great question, and as with most issues in financial planning, there is no definite answer.

Paying down the mortgage is the “risk-free” option. If $1,000 is applied towards the mortgage, there is a guaranteed savings of the mortgage interest on that amount.

Alternatively, if $1,000 is added to a retirement portfolio, there is no “guaranteed” return. Historically, the Canadian (TSX) and U.S. markets (S&P, Dow Jones) have returned around 8% in the long-run. We project about a 6-8% rate of return for our client’s long-term growth-oriented portfolios.

Mortgage rates are very low these days, somewhere around the 2.5% mark for a five-year fixed rate. This makes the “break-even” point for an investment portfolio to beat mortgage savings fairly low. Without talking about interest compounding or taxes, if the investments return more than 2.5%, then they beat out any mortgage savings strategy.

Our favourite strategy is a hybrid one. Invest long-term money in an RRSP and use the ensuing tax savings to pay down the mortgage. When families can maximize RRSP contributions, they can create significant tax savings which can supplement retirement income plans, as well as reduce mortgage debt. The tax savings created by an RRSP contribution can free up “new money” to be used to pay down mortgage debt. This quickly increases family net worth.

As we say, every situation is unique and depends on your mortgage interest rate and the anticipated return on your investment. Please call or e-mail us and we will be happy to work through the numbers to give you the best advice for your circumstances. We’re here to help you!

Terry Broaders

Weekly Update December 21 2015

“We May Have All Come On Different Ships, But We’re In The Same Boat Now” -Martin Luther King


TSX Outperforms Friday Despite Oil Decline

Canada’s main stock market index managed to close higher Friday while most of the rest of the world’s markets reported losses. The narrow gains came despite further decline in oil prices and global economic concerns. Wall Street closed sharply lower with oil the dominant drag. Asian and European markets also closed with losses but many closed higher for the week following the Fed’s interest rate decision which removed one element of uncertainty. The S&P/TSX Composite Index closed up 14.37 or 0.11%. The metals and mining sector of the TSX rose 6.76%, while global gold climbed 3.10% and materials gained 2.81%. Meanwhile, energy stocks closed 1.93% higher. Meanwhile, the loonie rose 0.03 of a U.S. cent to 71.71 cents US, a day after slipping below 72 cents US for the first time since May 2004. In New York, the Dow Jones average of 30 stocks plummeted 367.29 points to 17,128.55, the broader S&P 500 index gave back 36.34 points to 2,005.55 and the Nasdaq fell 79.47 points to 4,923.08.


U.S. Citizens Who Owe U.S. Tax Could Lose Passports

US citizens living outside the United States will need to become more vigilant about filing US taxes and having a US Social Security number starting Jan. 1, 2016. The alternative will be to risk losing one’s passport under a new section of the Internal Revenue Code. After several failed attempts in the past few years to enact a similar law, Congress on Dec. 3, 2015, passed a highway funding bill that gives the IRS and State Department some significant new powers: under new IRC § 7345, the IRS gets the ability to share information on delinquent tax accounts with the State Department and the State Department gains the authority to deny or revoke the passports of US citizens who have over $50,000 in tax debt or no Social Security number associated with their passport.1 President Obama signed the bill into law on Dec. 4, 2015, and it takes effect Jan. 1, 2016.
Groups representing US citizens living outside the United States and the press have, appropriately, focused on the State Department’s new power to deny and revoke passports when a US citizen has an outstanding tax debt of more than $50,000. These commentators have astutely pointed out that both a lack of clarity on how the statute will be enforced and ambiguities in the term “seriously delinquent tax debt” may mean that many expatriate Americans and dual citizens will be caught unawares when the State Department revokes or refuses to renew a passport because of a tax debt.


Sources: Bloomberg; Investment Executive;  Conference Board of Canada;,

Terry Broaders

Weekly Update December 15 2015

“There Is No Chance The iphone Is Going To Get Significant Market Share” -Steve Balmer, 2007, Microsoft CEO


Pain on The Markets As Oil Falls Below U.S.$36

Another big drop in the price of oil sent North American equity markets into sharp retreat Friday in a sell-off that also took the commodity-sensitive Canadian dollar below 73 cents for the first time since mid-2004.In Toronto, the S&P/TSX composite index lost 1.7% of its value, closing down 226.64 points to settle at 12,789.95. The Canadian dollar, which has hit several new 11-year lows since it closed last week at 74.76 cents U.S., was down another 0.59 of a cent Friday at 72.77 cents U.S.
In New York, the Dow Jones average plunged 309.54 points to 17,265.21, while the broader S&P 500 fell 39.86 points to 2,012.37 and the Nasdaq shed 111.70 points to 4,933.47. Traders headed for exits as oil fell below US$36 a barrel in the wake of a report by the International Energy Agency that said the global oversupply of crude would continue until late next year. The January contract for benchmark U.S. crude oil was down $1.14 at US$35.62 a barrel.


Morneau Increases Minimum Down Payment For Homes Over $500K

Major changes to the minimum home down payment were announced Friday by Finance Minister Bill Morneau. The amount homebuyers must put forward as a down payment on houses over $500,000 will now be 10%. Homes under $500,000 will still only require 5% down payment.  This is a game changer especially in Vancouver and Toronto where a small condo often costs over $500,000. It’s a move designed to cool off the booming real estate market in some of Canada’s biggest cities.  The stiffer down payment requirement is one of three new measures targeting the stability of the housing market. The Finance Department has tightened mortgage rules on several occasions in recent years in an effort to weed out marginal buyers and excessive speculation in the housing market. One of the changes saw the federal government reduce the maximum amortization period for government-insured mortgages to 25 years from 30 years. The Bank of Canada has also expressed concerns that too many Canadians risk becoming over-extended, especially once interest rates begin to rise.   Note that the down payment is still 5% on the first $500k, even if the home cost is $700k.  For example if you buy a 700k home under the old rules, a 5% minimum down payment is $35k.  With the new rules it would be $25k (5%) on first 500k plus $20k (10%) on the next 200k = a 45k minimum down payment. So a buyer would need to come up with another $10k.  On a $999,999 home, the minimum goes from $50k to $75k; another $25k is required.


Market Update as of December 11 2015

North America
The TSX closed at 12790, down -567 points or -4.24% over the past week. YTD the TSX is down -13.31%.
The DOW closed at 17265, down -583 points or -3.27% over the past week. YTD the DOW is down -3.19%.
The S&P closed at 2012, down -80 points or -3.82% over the past week. YTD the S&P is down -2.24%.
The Nasdaq closed at 4934, down -208 points or -4.05% over the past week. YTD the Nasdaq is up 4.38%.
Gold closed at 1076, down -10.00 points or -0.92% over the past week. YTD gold is down -8.19%.
Oil closed at 35.51, down -4.60 points or -11.47% over the past week. YTD oil is down -32.61%.
The USD/CAD closed at 1.37352, up 0.0367 points or 2.74% over the past week. YTD the USD/CAD is up 17.04%.

The MSCI World closed at 1664, down 14.00 Points or -0.86% over the past week.  YTD the MSCI World is down -2.68%.
The Euro Stoxx 50 closed at 3203, down 128.00 points or -3.83% over the past week.  YTD the Euro Stoxx 50 is up 1.80%.
The FTSE closed at 5953, down 285.00 points or -4.58% over the past week.  YTD the FTSE is down -9.34%.
The CAC closed at 4550, down 165.00 points or -3.50% over the past week.  YTD the CAC is up 6.48%.
The DAX closed at 10340, down 412.00 points or -3.83% over the past week.  YTD the DAX is up 5.45%.
The Nikkei closed at 19231, down 274.00 points or -1.40% over the past week.  YTD the Nikkei is up 10.20%.
The Shanghai closed at 3435, down 90.00 points or -2.56% over the past week.  YTD the Shanghai is up 6.18%.


Sources: Bloomberg; Investment Executive;  Conference Board of Canada;,

Terry Broaders

Weekly Update December 8 2015

“Guns and Bombs, Rockets and Warships Are All Symbols of Human Failure” – President Lyndon B. Johnson


TSX Index Lags N.Y. Markets as U.S. Jobs Data Impresses

North American stock markets finished the Friday session higher led by a gain of nearly 370 points on the Dow after another month of solid U.S. jobs growth. Toronto’s S&P/TSX composite index was up 34.10 points to 13,358.77, ending the week of trading at practically the same level it began. The Canadian dollar was down 0.21 of a cent at 74.76 cents U.S.
Wall Street posted even bigger gains during the session helped by November data, which showed a gain of 211,000 jobs in the United States, suggesting that an interest rate hike is in the cards from the Federal Reserve at its meeting later this month. The Dow Jones closed ahead up 369.96 points at 17,847.63 while the broader S&P 500 index advanced 42.07 points to 2,091.69 and the Nasdaq rose 104.74 points to 5,142.27. “I think the Fed wants to at least start the path towards normalizing rates, but the market is satisfied that it will be done in a very gradual fashion,” said Patrick Blais, managing director and senior portfolio manager at Manulife Asset Management. “We’re sitting in a golden scenario where the U.S. economy is strong but not too strong.”  Canada’s economy is facing a different scenario.  Statistics Canada’s latest monthly jobs survey found the economy shed 35,700 jobs in November, while the unemployment rate crept higher by one tenth of a percentage point to 7.1 per cent.


Consumer Confidence Moves Up in November

Consumer confidence in Canada improved in November boosted by the first increase in Alberta in six months and a big jump in Atlantic Canada. The Conference Board of Canada said November 3 its index of consumer confidence rose to 103.1, up from 95.3 in October. The jump was the biggest gain since March. The increase came as the index rose in Atlantic Canada, Quebec, Ontario, British Columbia, and Alberta. However, it slipped lower in Saskatchewan and Manitoba. Conference board senior economist Julie Ades noted there can be some volatility from month to month. “A lot of the recent weakness in consumer confidence is attributed to people’s perception of future job prospects in their community,” Ades said.  Alberta, which has been hit hard by the downturn in the price of oil, saw a five point increase to 50.5, however the index was still nearly 50 points below its average for 2014.
Atlantic Canada saw the index increase 25.2 points last month to 156.4 for November as the balance of opinion in the region improved on all four of the survey’s questions. The index is based on how respondents perceive their current finances, future finances, and future job prospects, and whether they think it is a good time to make a major purchase.  Overall, those questioned were more positive about their financial situation as 16.9% said they were better off now than six months ago rose, compared with 16.5% who responded that way in October.  The proportion of those who said they expect to be financially better off six months from now increased to 23.1% from 21.6%. Those who said they expect to be worse off slipped to 16.5% from 17.2%.  The survey was conducted between Nov. 2 and 12.


Market Update as of December 4 2015

North America
The TSX closed at 13357, down -11 points or -0.08% over the past week. YTD the TSX is down -9.47%.
The DOW closed at 17848, up 34 points or 0.19% over the past week. YTD the DOW is up 0.08%.
The S&P closed at 2092, up 2 points or 0.10% over the past week. YTD the S&P is up 1.65%.
The Nasdaq closed at 5142, up 14 points or 0.27% over the past week. YTD the Nasdaq is up 8.78%.
Gold closed at 1086, up 13.00 points or 1.21% over the past week. YTD gold is down -7.34%.
Oil closed at 40.11, down -1.60 points or -3.84% over the past week. YTD oil is down -23.88%.
The USD/CAD closed at 1.336859, up 0.0006 points or 0.05% over the past week. YTD the USD/CAD is up 13.92%.

The MSCI World closed at 1678, down 22.00 Points or -1.50% over the past week.  YTD the MSCI World is down -1.84%.
The Euro Stoxx 50 closed at 3331, down 158.00 points or -4.54% over the past week.  YTD the Euro Stoxx 50 is up 5.86%.
The FTSE closed at 6238, down 137.00 points or -2.15% over the past week.  YTD the FTSE is down -4.99%.
The CAC closed at 4715, down 215.00 points or -4.37% over the past week.  YTD the CAC is up 10.35%.
The DAX closed at 10752, down 542.00 points or -4.80% over the past week.  YTD the DAX is up 9.65%.
The Nikkei closed at 19505, down 379.00 points or -1.91% over the past week.  YTD the Nikkei is up 11.77%.
The Shanghai closed at 3525, up 89.00 points or 2.58% over the past week.  YTD the Shanghai is up 8.98%.



Sources: Bloomberg; Investment Executive;  Conference Board of Canada;,