As the new year was dawning you saw my Dec/Jan SWM letter, and I’m always grateful you reply with thoughts and questions. I shared that early 2023 should continue the recovery gaining speed since September. Year-ago markets were suffering Russia’s invasion, China’s covid, steep inflation, and rising interest rates. But storms turn, they always do. Four months now have been very generous to us, and I am fully confident we’ll be enjoying higher values as this year moves into summer and second-half.
NEW BULL MARKET GETTING ITS FEET
With interest rates nearing a peak, the way ahead is fueled with promise. One business site recently commented, “Rate cuts can goose the economy and act like steroids for markets.” Digital and print media favour juicy descriptions but it is increasingly clear: interest rates will pause, then fall. Investments accelerate most quickly in early seasons of a new and prosperous bull market. This will work very strongly for us over the coming months and seasons.
- PS: remember when a TV voice announced, “We interrupt this program for station identification”? This note is like that: see below. I’ll mention 2023 pages to update your files. I will be emailing clients directly, then our office will send pages prepared for electronic signature … or we can meet and do this in person.
2023 has opened very positively. Details would show how our portfolios purposely combine optimized income and accelerating growth. We see exceptional dividend/growth in January and the past four months, also in 5, 10, 15-year pictures. Sterling results too in our high-conviction Cdn/US Growth funds over such periods. Bond/credit positions now too add growth alongside income, recovering from 2022’s worst of 150 years. Eg. Unconstrained Income is powered today with 3 year duration and 7.2% portfolio yield. These are encouraging details but even more important …
MOST IMPORTANT FOR YOU.
Most important is how we keep in mind your personal goals, needs, hopes and values for your wealth. This is the real focus, the true juice that drives your future. This is #1 in your financial plan because your personal comfort, goals, and values drive everything we do. Returns rise, fall, or pause. Fund managers update holdings each day and month. Business cycles go through their course. Governments and central banks stimulate or dampen the world around us. But beneath all this, always, is what you want your money to do for you, and this is what we focus our financial preparations and planning to achieve for you. We document every wish in your financial plan – and of course they’re hardwired in my memory. I can generally quote exactly how you’ve told me what you want. Maybe you find yourself in some of the following…
Things you’ve told us are most important:
- Keep our money safe; avoid risks we’ve seen in the news.
- We started late: can our money grow so we won’t be poor?
- We understand temporary drops; don’t allow any permanent losses.
- More wealth = more choice: we want to be free, live as we choose.
- Want to retire “yesterday” with a strong sustainable income for life.
- Gifts: value we can give and preserve for our family, and charity.
- More … what other thoughts can you add?
People especially ask to avoid major losses, increase growth, and sustain income for life. Yet this world’s smoke-and-mirrors advertising pushes links and headlines promising financial candy and miracles; too many are bound to fail. They hide the risks, and they skirt around the true grail (net risk adjusted returns) which means sustainable income and lifelong growth at below-market risk. We’ve all known people who were buying cannabis, cryptocurrency, hedges and hot ideas, eager for rainbows without allowing for rain. So when those things drop 65% it needs an astonishing 300% just to recover. Or down 100% then it’s gone – no recovery. The history of high-risk and hot ideas clearly proves, they cannot buy freedom, they cannot offer independence, and they cannot last a lifetime or honour the lifestyle you choose.
Other ways people take unwanted risks: (i) Deposits that will pay less than inflation, so as life costs rise, savings disappear. (ii) Leveraged equity designs that can lose 50-75% in a heartbeat, or investing simply in the whole market which drops 35-60% once or twice each decade. See “passive”, next. As you can’t win by losing, it’s vital to avoid those unhappy results. If you know the power of compounding: compound growth is superb; it’s opposite, compound losses are devastating.
“Passive” investing is a modern theory to cheaply buy a whole market or sector, combining all the winners and losers. But this gives no useful answer for the lost decades. Take the US stock market from 2000-2010: real after-inflation return ~ 0%. Canada’s TSX 2010-2020 did much the same: real return near 0%. Europe’s STOXX 600 was so weak in both of those decades, it gave 20 years below 0% real return. Wouldn’t it pay more to own winners? Avoid losers! This is why we use proven processes to help reduce risk and provide more predictable profits. (See LIM+).
In short, these are things we know to be true. Aiming at income-only can sacrifice growth which limits your future. Aiming for growth-only brings the hazard of repeated and compounded losses which may never recover to fund your future. Cheap schemes and clever designs too soon disappoint: the news is full of stories like that. Our focus has always been to safely, conscientiously combine sustainable income and growth … in a process that rewards our clients for life and forever.
OUR PROCESS.
I’ve often shared the history and power in Life Income Mandates: , which adding growth becomes LIM+. My 2013 Lifetime Of Wealth (free download here) shows a graph p.96 of this process proving true when the 2008 worldwide meltdown dropped 65% and took six years to fully recover: our drop was a fraction, our recovery was speedy (18 months), with continued growth in our accounts when world markets took six years to recover. These mandates were built on the proof of 200-400 years of history, to build and protect wealth.
Our Sovereign Wealth Management website (SWM) adds what has always been vital: our commitment to you and your dear ones, forever. Tour the website, see our Approach, our Philosophy, our Process, our Team. All that we do arises from understanding your specific situation and what you are wanting to accomplish. When we first meet we find the gaps, and we pull the pieces together into a coherent picture. Everyone wants to know they’re going to be okay: you’re going to be okay, our plan continues to assure your future results.
In my personal transition (easing to associate-advisor since last year) you’re getting two-for-one! I’m here for you, and Whitney joins many of our meetings so she will know you just as I do, before any retirement on my part. This seamless transition honours a promise we’ve always made to sustain your goals for Life, Wealth, and Estate. 
Whitney and the team will remain my family’s advisor when time comes to retire my licenses and registrations. She is SWM’s founder and our senior wealth and estate advisor. Two weeks ago she was recognized with the Queen’s Platinum Jubilee Pin honouring her steady history of community leadership. Including this: she has built a group of 1500 members known as From Wallet to Wealth, mentoring, educating, inspiring women and their families … with monthly meetings and an annual gala which has raised > $170,000 for the Halton Women’s Centre. I am beyond grateful as she and I have been dear friends and colleagues since 1997, then joined as SWM early 2005. Whitney’s empathy and energy, deep experience and sincere understanding will continue to honour our promises and assure we sustain your plans, “Life and Wealth”, all the years ahead.
- As mentioned earlier, we will reach out with 2023 document updates needing signatures. When we send to you, we can expedite digitally or by mail, or meet in person — your choice, whichever is most comfortable for you. Ask me any questions you may have.
Yours always in Financial Security for LIFE.
Brian Weatherdon, MA, CFP, CLU. 905-637-3500
627 Guelph Line, Burlington, Ont. L7R 3M7. 1-877-937-3500
Brian@SovereignWealth.ca.
Certified Financial Planner, Certified Retirement Coach
Author: A Lifetime Of Wealth — And How Not To Lose It (2013). Protecting Life, Loved Ones, and Future Dreams (2013). Your Business, Your Retirement: Halton Retirement Study (2015).
** This monthly letter touches on key strategies in Canadian and global investing and financial 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 are from publicly available sources and research from a variety of firms including but not limited to Canada Life, CIBC, Dynamic, Mackenzie Financial, RBC / PH&N, and more. Opinions in this letter belong solely to the author and no other body is responsible for the content expressed here. We value opportunity to coordinate with your legal and accounting advisers to further your financial goals in home and business. We are grateful always to receive your comments and questions.