April 2017 SWM Letter

Dear friends, as you’ll see when your March 31st summary arrives, values rose well in the first quarter 2017.  The past year even brought double-digit returns.  Strongest positions included Canadian Dividends, Emerging Markets, Small-cap businesses in Canada and abroad.  Joining the rise is Global Infrastructure which had paused for a time in 2016, and more recently Global Dividends.  Interesting too are our fixed-income positions with 5% to 15% returns over the past year.

Many news writers suggest risks are rising.  That could be “fake news” for there has never been a time without risks.  And many risks are lower than they seemed 12-15 months ago.  Corporate earnings are stronger in North America and especially around the world.  Governments see enough stability to lighten the interest-rate stimulus that has dominated (addicted) economic news since 2009.

Avoiding wrong assumptions.

Naturally people may ask, “Can the good times last?”  If markets have gained 100% since the depth of 2009 is this “bull market” getting old?   But drawing the wrong conclusions could prove costly … from assumptions that could be altogether false.

  • One popular assumption is the age of this ‘bull market’.  Did it start in 2009 or in 2011?  But the path any market takes is not based on how old it is, rather on many underlying factors which seldom hit the news.  Those who worried unduly with news media warnings in 2013, 2014, 2015, 2016, missed enormous rewards that benefited our clients.
  • Another assumption is that we’re investing in the whole stock market, but that is never the case.  We focus on dividends in and beyond Canada, also on the powerful income of global infrastructure and real estate assets, and including higher-coupon fixed-income worldwide.
  • News writers may suggest there are times to be “in” or “out” of the market, but they’re assuming that if you know when to get out, you’d also know when to get back in! Such a proposition has failed (other than random chance) even among experts.   In contrast we speak of “Life Income Mandates” which keep paying an income, at less risk, and thus help perpetuate money for life! 
  • Perhaps the greatest fallacy of the “aging bull market” conversation is seeing 100% gain since 2009.  But from the peak in 2008, markets have made hardly any gain at all.  Market losses of 2008-2009 took six years until 2014 to fully recoup.  In the stock-channel picture I occasionally share (or at Andex.com) we realize that despite ever-present risks in our world today, future values will certainly rise and help support lifestyle needs for the years to come.

    USA / Canada: rough journey though it rises higher

  • TV and other news media may speak excitedly of buying the market, or warning to get out of it, but our process has never needed such extreme action.  You’re familiar with our Life Income Mandates (see here). With 60% to 90% of a portfolio focusing on Life Income Mandates we find a modest portfolio adjustment will suffice.  This was proven through 2000-2002, again in 2007-2009, and the years since.  Going back it has proven safe for 200 to 400 years.

    Smoother journey with Life Income Mandates

Safeguarding Life Income.

People who expect to draw off their investments for big-ticket items:  (i) buying a home, (ii) funding an education, (iii) pausing a career briefly, or (iv) retiring permanently, need to know how we safeguard your “Income Reservoir”.  (See LINK.)   The money you’ll spend in the next two to three years should be especially secure, offering some growth while guarding the downside.  Thus we move profits on occasion from dividends and other growth, to refill the reservoir from which you’re drawing money income.

Continuing the conversation.

Before I close our brief letter today I want to thank you for your trust as we serve you.  This letter is now in its 20th year.  What in early years focused only on investments, developed to share widespread insights into financial literacy, security, and estate planning, for life and loved ones.  Whether you read and carefully ponder, or quickly scan to pick up an idea, always feel free to reply with any question.  This is “our letter” (yours and mine) – part of our ongoing conversation throughout the years.

BONUS:  some readers will enjoy two articles from The Economist, a global newspaper of high esteem since 1843:

We agree, along with our major research partners, favourable winds will continue to push storm clouds away.  And if challenges arise this year or next, we’ll find ourselves reasonably insulated as Life Income Mandates offer growth in good times, and less risk in troubled times.  This is highly relevant because it means we can stay invested for life-income while protecting any storms or shivers along the way.

Yours in Financial Security for LIFE!

Brian Weatherdon, Certified Financial Planning, Retirement Coaching.

905-637-3500 x 223.  1-877-937-3500 x 223.  Brian@SovereignWealth.ca

Author:  A Lifetime of Wealth.  Protecting Life...  Halton Retirement Study.

** This monthly letter touches on key strategies in Canadian and global investing and Ret.Coach SEALfinancial planning. This letter is not an offer to sell any kind of security, insurance, or program. Historical returns and risk measures are not a valid guide to future performance. Returns whether historical or forecast are from publicly available sources and research from a variety of firms including but not limited to GLC, RBC, CIBC, Mackenzie, Franklin Templeton.  Opinions reflected in this letter belong solely to the author and no other body is responsible for the content expressed here. We value opportunity to consult alongside your legal and accounting firms to advance your financial security and unique goals. We are grateful always to receive your comments and questions.

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