Odette FInancial Brief – June, 2010

“A vacation is having nothing to do and all day to do it in.”
— Robert Orben

We are going on vacation, in Greece of all places! We booked this trip back in December not knowing about the impact of the financial crisis that was about to occur. Are we going to cancel our trip fearing more riots? Not a chance! The Greek people need our travel money more than ever. It sure will be interesting to see first hand how things are over there economically and how people feel about their situation.

Before leaving for two glorious weeks of rest, sunshine and relaxation, I thought I would report some news to you:

• Several Canadian surveys were out this spring. The most shocking is an Angus Reid survey on investors knowledge:
• Most investors were unaware that the markets have even recovered, 74% thought the S&P/TSX (Canadian stock index) was down, flat or didn’t know. The market has actual risen in excess of 30%.
• Canadians also appear to be about to miss out again on opportunities in 2010, as 67% have no plans to invest.
• The survey revealed that investors who have plans to invest in 2010 tend to have higher incomes and more education and favour balanced solutions.
• Another survey from the Canadian Institute of Actuaries suggests almost half of Canadians near retirement feel they are not financially prepared to live comfortably after they leave the workforce.
• 42% of respondents indicated they were unprepared for retirement and that almost an equal number had not sought any financial advice. That included consulting their banks, financial advisers, a relative or even a book on retirement.

That is scary! YOU should congratulate yourselves for being on top of your future. If you feel a little unsure, it means that it is time for a meeting. We need to plan ahead and our annual meetings are essential to ensure you stay on track.

Mortgage Indiscretions
I have received more calls about mortgage penalties these days than ever before. The figures quoted by Financial Institutions are grotesque! Two clients last week were quoted $14,000 and $15,000 penalties for breaking or remortgaging at a lower rate early. What happened to the 3 months interest penalty? Make sure you ask what the penalty will be for breaking the mortgage and if it is transferable to a new property. Don’t be afraid to ask and negotiate. If you are not sure, we can put you in touch with a mortgage specialist we trust.

Recent Volatility
I wish I did not have to comment on that, again. The past 10 years referred as the lost decade has been too difficult for too many. Just like the lack of sunshine in Vancouver lately, we need a break! Greece credit rating was downgraded this week, but most World markets did not react, they actually went up! I think the European crisis has been factored in.

The current events in Greece and other European countries will likely have little effect on the World capitalization. It is unlikely to affect your investment in a big way over the mid or long-term. Canada will likely not be affected much at all other than through currency fluctuations.

For the coming year
We are likely to experience a “sideways market” (flat market) therefore, we need to look for best-of sector class, within a mix of equity-capitalization. Picking good managers will be essential. Canada -US dollar should stay near parity which will negatively impact Canadian manufacturing in the short term. Growth is expected to come from the strength in Emerging Markets. The Asian shift is a permanent one. We are likely to stay in a low inflationary environment for a few more months.

Looking forward to coming back to you relaxed and refreshed ready to serve you! In the meantime, the YOU FIRST team will be here if you need anything at all.

Enjoy your summer!

Odette