Key themes we share in this month’s letter: (i) When are the best times to check investment accounts? (ii) What can Net Deposits tell us? (iii) Look forward. Comments from RiverFront in the U.S. capture the third-quarter we’ve just completed: “After two quarters of strong markets, the third quarter started on an optimistic note; inflation had been declining and earnings were holding on. However, this optimism didn’t last; both stocks and bonds had negative returns in Q3, despite declining inflation and strong earnings. This quarter reminded investors that markets look ahead and not in the rearview mirror…”
WHEN IS BEST TO CHECK INVESTMENTS?
Clue, not October. Third-quarter returns (July to Sept) are almost always less generous, and the past quarter’s results pushed down even the more defensive sectors into the red. Even banking and utilities, and one could protest, “but that’s where the money is, so it’s got to be safe.” But Q3 can hide a sand trap or two, and this year was like that.
At my gym I watched a clip on TV as a professional golfer carefully chipped his ball out of the long grasses, lifting it nicely aloft, yet it passed over the green and into a sand trap on the other side. I’m sure he has better days and he won’t be repeating that pattern again soon. Good thing golfers are rated not by traps but how they complete the game.
2023 has been a succession of ponds and sand traps. Among the ones you see in this picture (add colours if you like) there were four peaks and dips, putting Canada’s market back to Jan. 1st values. Our client results have been more buoyant with Global Dividends, Emerging Markets, Canadian Growth, and Strategic Income, but 2023 has in no way been generous. On the bright side, it’s in times like these that our portfolio teams gain deeper value to accelerate future growth: we benefit strongly over the seasons ahead.
Truly, January and July are best to check account values. Twice a year is a fair measure of progress. In our home we do a full review once yearly in January. That gives us a “long view”: fewer bumps, with steady progress year-over-year. I’ve never thought much of Sept 30th because too soon it’s history and values are trending upward toward year-end.
Golfers focus beyond traps and ponds to the flag that marks their desired destination. Vision succeeds by focusing on the future goal.
VALUE OF “NET DEPOSITS”.
Whitney reminds me of this, and it arises distinctly when we review client accounts. “Net deposits” compare your deposits minus withdrawals, to the value of your accounts now or year-end. We often see accounts reaching twice or three-times net deposits. Or more surprising, even “negative net deposits”.
Negative net deposits arise as people invested for many years, and have drawn income for retirement and other expenses beyond what they ever invested. More outflow than deposits, and yet account values remain substantial, always focused on life and comfort for the long term.
- In some accounts this is less visible due to moves between accounts or platforms, for example Personal and Joint accounts, TFSAs and Registered or Open accounts, mutual & segregated funds, distorting original dates of “inception”. Still we have recent periods (3 – 5 years or more) revealing timely progress.
This helps answer where were we before, and where are we today. I know where I was at 40, 50, 60 …and now. I can look ahead to where I may be at 70, 75, 80 etc. This is a reliable planning process to preserve a Lifetime of Wealth … and beyond.
CONFIDENCE ON THE HORIZON.
Our first picture above was year-to-date. Now compare a 3-year picture revealing growth over time despite the past 18 months. And remember, our own accounts have given a steadier picture as we focus to reduce market risks and sustain comparative growth and income.
So with time we’re confident to calm any storms that appear in media headlines. For sure 2022 & 2023 have had tough times with interest rates and rising regulatory burdens hitting banks, utilities, etc. Yet those sectors will rise again as they’ve done before, and contribute generously to our future growth.
In every race there’s a goal. In golfing there’s a flag. In running there’s a ribbon. In swimming there’s a touchpad. Same for investing: we focus on the goal, giving our absolute best to secure families and lifetimes, life-income and family estate. Ponds, traps and grassy borders are all short-term noise; they don’t stop us. 
When accounts gain quickly we ease back our future projections; when values pause or drop we know more exceptional returns are ahead.
It is always so; it balances over time. Media chatter about various risks in the markets and our world, will be replaced quickly: from the floor or foundation that is now forming we’ll enjoy a highly profitable 5, 8, 10 years ahead. Witness in this third and concluding picture here today: with all the downs, it still goes up. It’s worth quoting two of our clients: “what goes down must go up”; “onward and upward”. Good words! Things always work out (as they did in 2008, 2011, 2015, 2018, 2020, 2023). Yes, they always will.
Yours in Financial Security for LIFE.
Brian Weatherdon, CFP, CLU. 905-637-3500
Whitney Hammond, CFP, CLU. 905-637-3500
627 Guelph Line, Burlington, Ont. L7R 3M7
** 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.