Category Archives: Investments

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%





Terry Broaders

Weekly Update November 8 2016

“Intimidation, Harassment and Violence Have No Place In a Democracy” -Mo Ibrahim

North American Markets Lower Ahead of Election

Uncertainty around the U.S. election continued to weigh on stock markets, pushing the S&P 500 to its ninth consecutive decline.
In Toronto, the S&P/TSX composite index gave back 74.17 points to close at 14,509.25. South of the border, the Dow Jones industrial average lost 42.39 points to 17,888.28, while the S&P 500 declined 3.48 points to 2,085.18. The Nasdaq composite was off 12.04 points at 5,046.37. The loonie was at 74.61 cents US, down 0.11 of a U.S. cent from Thursday’s close. The December crude contract fell 59 cents to US$44.07 per barrel and December natural gas was essentially flat at US$2.77 per mmBTU. December gold rose $1.20 to US$1,304.50 an ounce and December copper contracts were up two cents to US$2.27 a pound.


Canadian Economy Surprisingly Adds 44,000 Jobs

The economy gained 44,000 net new jobs in October but the gains were entirely in part-time employment, Statistics Canada said Friday. The overall increase was driven by 67,000 additional part-time jobs for the month, while the number of full-time jobs fell by 23,000. The unemployment rate held steady at 7% as more people entered the labour market. Economists had expected a loss of 10,000 jobs overall and the unemployment rate to remain unchanged, according to Thomson Reuters.  The increase in October follows a gain of some 67,000 jobs in September that saw gains in both part-time and full-time work. Compared with a year ago, there were 140,000 more jobs in October including a gain of nearly 16,000 full-time jobs and 124,000 part-time positions. For October, the goods-producing sector gained nearly 21,000 jobs, boosted by a gain of 24,000 in the construction industry. The natural resources sector also gained 10,000 jobs, its first notable increase since March 2015.

The services-producing sector added more than 23,000 jobs as wholesale and retail trade jobs climbed 19,000 and the “other services category” increased by 18,000. The educational services group climbed by 16,000. Ontario gained 25,000 jobs in October, while British Columbia increased 15,000. The number of jobs in Newfoundland and Labrador fell by 5,600.



North America
The TSX closed at 14509, down -274 points or -1.85% over the past week. YTD the TSX is up 11.71%.
The DOW closed at 17888, down -273 points or -1.50% over the past week. YTD the DOW is up 2.66%.
The S&P closed at 2085, down -41 points or -1.93% over the past week. YTD the S&P is up 2.01%.
The Nasdaq closed at 5046, down -144 points or -2.77% over the past week. YTD the Nasdaq is up 0.78%.
Gold closed at 1305, up 8.00 points or 2.27% over the past week. YTD gold is up 23.23%.
Oil closed at 44.12, down -6.19 points or -12.30% over the past week. YTD oil is up 19.08%.
The USD/CAD closed at 1.340381, up 0.0020 points or 0.15% over the past week. YTD the USD/CAD is down -3.13%.

The MSCI closed at 1667, down -28 points or -1.65% over the past week. YTD the MSCI is up 0.24%.
The Euro Stoxx 50 closed at 2955, down -124 points or -4.03% over the past week. YTD the Euro Stoxx 50 is down -9.58%.
The FTSE closed at 6693, down -303 points or -4.33% over the past week. YTD the FTSE is up 7.23%.
The CAC closed at 4378, down -171 points or -3.76% over the past week. YTD the CAC is down -5.59%.
DAX closed at 10259, down -437.00 points or -4.09% over the past week. YTD DAX is down -4.51%.
Nikkei closed at 16905, down -541.00 points or -3.10% over the past week. YTD Nikkei is down -11.19%.
The Shanghai closed at 3125, up 21.0000 points or 0.68% over the past week. YTD the Shanghai is down -11.70%.


Sources: Bloomberg; Investment Executive;

Terry Broaders

Weekly Update October 25 2016

“Autumn Is A Second Spring When Every Leaf Is A Flower ” -Albert Camus

TSX Climbs;  Canadian Dollar Takes a Dive

The loonie took a dive Friday as disappointing economic data coupled with recent comments by Bank of Canada governor Stephen Poloz hinted that an interest rate cut may be on the horizon. The Canadian dollar finished the day at 75.04 cents US, down 0.59 of a cent after Statistics Canada released new economic data showing weaker-than-expected inflation and retail sales figures.  The federal agency said the consumer price index was up 1.3% in September compared with a year ago. Statistics Canada also reported that retail sales fell 0.1% to $44.0 billion in August. The decline was due to lower sales at motor vehicle and parts dealers as well as general merchandise stores. Earlier in the week, Poloz said the central bank’s governing council actively discussed the possibility of cutting its benchmark lending rate before deciding to leave it at 0.5%.
The Toronto Stock Exchange’s S&P/TSX composite index hit a 16-month high, gaining 91.12 points to close at 14,939.04. The market hasn’t closed above 14,900 since late June 2015. Most segments of the TSX closed higher, with energy stocks leading the way, up 0.94% on stronger crude prices. The sole exception was consumer staples stocks, which slipped 0.15% after Statistics Canada reported that food prices declined last month.  In New York, the Dow Jones industrial average lost 16.64 points to 18,145.71, the S&P 500 index lost 0.18 of a point to 2,141.16 and the Nasdaq composite rose 15.57 points to 5,257.40. In other commodity news, the December crude contract strengthened to US$50.85 per barrel, up 22 cents.


CRA Reports $240m In Real Estate Tax Fraud

The CRA crackdown on real estate tax fraud is producing some big numbers in audit recoveries. The CRA’s website shows that, for the last year and a half, audit recoveries in B.C. and Ontario total more than $240 million. In B.C., $30.3 million (from 2,366 case files) was recovered; in Ontario, that figure jumps to $210.4 million (from 13,403 case files). The CRA applied an additional $12.5 million in penalties. Taxes on real estate transactions in the Greater Toronto Area have been under greater scrutiny for some years. In 2015, the CRA doubled its efforts in B.C. That was the same year the tax agency started a review of 500 high-dollar real estate transactions in B.C. to uncover tax issues not already identified. On its website, the CRA lists its top areas of concerns for real estate tax compliance, including: questionable fund sources for buying property; property flipping; unreported GST/HST on the sale of new or renovated property;  and unreported capital gains.
Taxpayers identified as high-risk are audited. The CRA applies penalties equal to 50% of the additional tax payable if a taxpayer knowingly makes a false statement when filing.



North America

The TSX closed at 14939, up 354 points or 2.43% over the past week. YTD the TSX is up 15.02%.
The DOW closed at 18146, up 8 points or 0.04% over the past week. YTD the DOW is up 4.14%.
The S&P closed at 2141, up 8 points or 0.38% over the past week. YTD the S&P is up 4.75%.
The Nasdaq closed at 5257, up 43 points or 0.82% over the past week. YTD the Nasdaq is up 4.99%.
Gold closed at 1268, up -6.00 points or 1.28% over the past week. YTD gold is up 19.74%.
Oil closed at 50.31, down -0.01 points or -0.02% over the past week. YTD oil is up 35.79%.
The USD/CAD closed at 1.333616, up 0.0173 points or 1.32% over the past week. YTD the USD/CAD is down -3.62%.

The MSCI closed at 1704, up 10 points or 0.59% over the past week. YTD the MSCI is up 2.47%.
The Euro Stoxx 50 closed at 3078, up 53 points or 1.75% over the past week. YTD the Euro Stoxx 50 is down -5.81%.
The FTSE closed at 7021, up 7 points or 0.10% over the past week. YTD the FTSE is up 12.48%.
The CAC closed at 4536, up 65 points or 1.45% over the past week. YTD the CAC is down -2.18%.
DAX closed at 10711, up 131.00 points or 1.24% over the past week. YTD DAX is down -0.30%.
Nikkei closed at 17185, up 329.00 points or 1.95% over the past week. YTD Nikkei is down -9.71%.
The Shanghai closed at 3091, up 27.0000 points or 0.88% over the past week. YTD the Shanghai is down -12.66%.

Sources: Bloomberg; Investment Executive;

Odette Morin

How Much is Too Much Equity?


When you come in for your annual review meeting, we tell you that you have 80% equity and – in some cases – you get concerned. Is that too much to be investing in the stock market, you ask? Shouldn’t you have more of safer fixed income especially as you get closer to retirement? These are valid questions.

The old investing rule of thumb was to have an equal amount of fixed income to your age.  So if you are 50, you should have an equal proportion of fixed income and equity.  This is now thought to be too conservative because of three main reasons:

  • We live longer, and we therefore have a longer time horizon and need more money to fund a longer retirement. Many now live now live beyond the 80-85 year life expectancy.
  • Fixed-income yields have plunged in past years, and are likely to stay very low in this low interest rate environment. If inflation is higher than the saving rate you get, you are actually “losing” money with a safer investment.
  • Dividends keep up with inflation, which is very important over the long-term, and also because many pension plans no longer guarantee inflation adjustments.

While stocks are more volatile in the short-term, they tend to rise over the long-term. The longer the holding period, the higher the probability that you will come out ahead. Morningstar data service, shows that the S&P500, for example, has produced positive returns in about 95% of rolling monthly 10-year holding periods from 1926 to 2015. For 15-year periods, the return was positive 99.8% of the time. That is why we always buy quality, diversify, and hold regardless of market sentiments.

So, how much equity and fixed income should you hold in your own portfolio?  It highly depends on your personal risk tolerance, as rated when you first became a client; also, it depends on whether you are retired & need income from your portfolio, or are still in the accumulation phase.

Other factors include how much other liquid savings you have on hand in case of an emergency, and if you also are part of a pension plan. Typically, we like our retired clients to have a minimum of 30% fixed income, and our younger clients only 20%. Therefore, 70% to 80% equity is normally what we recommend.

These are general guidelines. We look forward to discussing your personal asset allocation at your next annual review meeting.




Odette Morin

Where are Interest Rates Headed, and Why Should You Care?

Text Interest rates on up trend arrow, with financial data visible on the background.

All eyes are on Janet Yellen, Chair of the US Federal Reserve, these days to try to anticipate where interest rates will go. For the United States, the talk is all about when and how high, not if.  In Canada, it is a different story. Bank of Canada Governor, Stephen Poloz, reiterated that rates are not expected to go up yet. Many analysts believe there won’t be a rate increase until some time in 2018. Our economy is not growing meaningfully enough, and there is no inflation to worry about. Rate increases are a monetary tool to tame rapid growth, and to contain inflation.

While low interest rates are good for Canadians’ pocket books, for now, eventually, rates will go up here in Canada too and this is nothing but bad news for those with too much debt. Unlike the Americans, Canadian debt levels have steadily been increasing in recent years. Raising rates too high or too quickly  risks a huge debt problem for many Canadians.

A recent report by credit monitor TransUnion shows that up to a million Canadians would suffer financial stress if rates increased by 1%. However, rates are likely to increase by 2 or 3%, not only 1%. The Bank of Canada’s own research, states that the Bank’s natural rate of interest is in the range of 3% to 4% (*). This means that the best bank rate to consumers would be in the 4% to 6% range. That kind of increase would translate to considerable economical damage, and would be devastating to real estate markets.

We should care very much about interest rates as they impact us in many ways. Our best word of advice is to use current low interest rates to reduce debt as much as possible. Make sure that you can easily afford a 5-6% interest rate on your mortgage, for example. Manage your credit responsibly, and borrow only what you can afford at the anticipated higher rate.

Rate increases will also have an effect on your investments. Make sure that your portfolio is well balanced, keep fixed income in the lower range of your target allocation and select dividend paying equities which will help keep up with inflation and reduce volatility. Finally, don’t miss your annual portfolio review. This is becoming more important as we approach these uncertain times. This is when we rebalance your portfolio and review your circumstances in light of the current economic environment.

(*) Globe & Mail – Unlike the Fed, the BofC is constrained by a paradox of household debt. Sept 22, 2016 Louis-Phillippe Rochon Professor at Laurentian University.