February 15, 2016

2015 Taxes

Filed under: Uncategorized — MikeT @ 12:58 pm

Happy tax time! Contact me once you have all your tax slips – the sooner the better to get everything processed before the rush!

July 16, 2014

The Perspective – Investors Rewarded with Strong Gains

Filed under: Uncategorized — MikeT @ 11:30 am

The first half of 2014 is now behind us! What started off as a banner year for Canadian athletes in the Sochi winter Olympics (where Canada won 25 medals including ten gold medals) has continued on the venerated grass courts of Wimbledon where young Canadian tennis players Milos Raonic and Eugenie Bouchard broke through to the semi-finals and finals respectively.  While Canadian athletes reaped the rewards of their efforts during the first half of 2014, so too have Canadian investors who in the middle of June finally saw the S&P/TSX index close above its pre 2008 credit crises high. 

In fact, thus far Canadian equities have led the way in 2014. Tthe S&P/TSX Composite Index gaining 12.86% (Guardian Capital LP), handily outpacing most other developed markets such as the S&P 500 and MSCI world’s indices which were both up 7.54% and 6.58%, respectively (Guardian Capital LP). 

While the Canadian economy has continued to gain traction there is some concern about the US economy which, due to an unusually harsh winter suffered a drop in economic output in the first quarter of the year. This drop in economic activity in the first quarter was largely caused by weakness in the housing sector, net exports and healthcare spending and has changed course in the second quarter which has seen improved economic data led by higher employment. Financial markets are nonetheless still wrestling with the US economies ability to sustain growth especially with the continued tapering of quantitative easing as the US Federal Reserve once again reduced monthly bond purchases from $45 billion to $35 billion (in June). This is now less than half the $85 billion a month it was pumping into the economy in 2013.

While the Sochi Olympics captured our attention in the first quarter, geo political risks led by Russia’s efforts to reclaim the Crimean Peninsula from the Ukraine captured our attention in the second quarter as did the renewed fighting seen in Iraq.  

In Europe, the second quarter was dominated by elections and saw the rise of anti-Europe parties throughout the European Union especially in France where the “Anti-EU National Front”  gained 26% of the vote.  June also saw the European Central Bank (ECB) cut interest rates to record lows and announce that for the first time it will begin charging banks on overnight deposits, in an attempt to force them to increase lending to smaller businesses. While the ECB stopped short of promising a US style Quantitative Easing program it did announce its intention to do more in order to stimulate economic growth.

Meanwhile, China has also struggled as the economy continues to be weighed down by the housing market. In a recent survey by Bloomberg, economists expect that GDP growth in China will be the lowest level in 24 years.

Although, the sustained efforts of the world’s central banks in providing monetary stimulus to financial markets appears to have positioned global economies to continue upon a path of slow recovery, there are still risks. Perhaps the biggest of which is the lack of volatility across asset classes which can sometimes be interpreted as over optimism amongst investors. As always optimism needs to be paired with balance.

April 25, 2014

The Perspective – Spring 2014

Filed under: Uncategorized — MikeT @ 11:28 am

Winter, Snow, Polar Vortex, Frost Quake!  Raise your hand if you are one of the millions of people whose fingers are crossed that these words are a thing of the past.  If you feel like this winter was one of the worst you can remember, you’re probably right. A “misery index” released by meteorologists from the U.S. National Weather Service shows  that the winter of 2014 was indeed one of the most miserable on record.

However, one bright spot is that while we hibernated, Canada put forth a tremendous effort in the Sochi Winter Olympics, and while we didn’t surpass our Vancouver 2010 gold medal count, gold medals won in men’s and women’s hockey satisfied a nation’s expectations and hopes.

And now we can finally look forward to spring which has already brought the vernal equinox which is the day of the year when light and dark are balanced. True or not, it’s said that on this day you can balance an egg on its end.  Although we still have a little way to go to really enjoy the warmth and light that spring brings, we can begin to think about what we can do to renew ourselves and to better balance our lives.

While the first quarter of 2014 has seen political unrest in Eastern Europe between Russia and the Ukraine, a new Prime Minister in Italy and weak news about the state of China’s industrial production, the story of the first quarter has really been about balance.

Under the leadership of new Federal Reserve Chair Janet Yellen the US has continued to claw back their bond purchasing program known as “Quantitative Easing”. Designed to stimulate economic activity in the wake of the 2008 credit crisis, quantitative easing at its zenith called for the monthly purchase of $85 Billion of US bonds by the Central Bank. In December 2013 Ben Bernacke finally ended speculation about when the US Federal Reserve would begin to reduce Quantitative Easing when he announced his intention to reduce the amount of QE from $85 billion to $75 billion a month. Two federal reserve committee meetings later have seen the Fed continue along this course, tapering the purchase of Treasury bonds by a further $20 billion (down to $55 billion per month) and remain on course for a complete exit of Quantitative Easing by the end of the year.

The theme of balance was also echoed in Canada when Finance Minister Jim Flaherty delivered what will be his last budget in February. In this budget he promised to bring balance to federal spending in 2015. Perhaps it is this balance that will form part of Flaherty’s legacy as if budget 2014 projections prove true; there will be a surplus in Federal spending for the first time since the 2007/2008 fiscal year.

So while the winter of 2014 saw consumers retreat to their homes, where they cozied up to their television sets to cheer on their favorite athletes, the spring has finally sprung and consumers are expected to spend once again, thus helping the global economycontinue to grow at a slow yet steady pace.

March 2, 2014

2013 Tax Season

Filed under: Uncategorized — MikeT @ 11:24 am

Tax time is here!  Contact me once you have all your tax slips – the sooner the better to get everything processed before the rush!

May 20, 2009

Financial Planning Notes – May 2009

Filed under: Uncategorized — MikeT @ 12:00 am

In my January newsletter, I suggested that when the economy recovers that it will be led by equity markets. Although it is difficult to say where we exactly are in the economic downturn, it is my opinion that the worst is behind us.

We have seen the major Canadian stock market, the S&P/TSX, wipe out losses experienced in the beginning of the year and move strongly into positive territory, up to 9.6% year-to-date(1). A major stock index in the U.S., the S&P 500, has also made up ground from the beginning of the year with only a slight year-to-date loss of -1.1%(1). While as of April 30th, the MSCI World Index has shown a 3-month return of 7.6%(1). Equity markets have traditionally been leading indicators of where the economy is headed so these potentially are signs of a recovery on the way.

Further, an economic recovery can be anticipated with signs that the global credit market is stabilizing and improving. The LIBOR, which is the interest rate offered to the world’s most preferred borrowers (strongest banks), is now down almost 5% in May 2009 on the 3-month rate from its peak in October 2008(2). My belief is that this is significant progress as it strongly encourages banks around the world to lend more money to credit worthy companies that have been struggling since the credit freeze began (hope you’re still awake after that bit of news). More borrowing is not what consumers need but is vital for companies to survive and grow, supporting commerce and keeping people employed.

There will continue to be bad news as we move along in the recession but keep in mind that this is often fallout from earlier problems that started the recession. The ripple effect is normal and usually signals the stage we are at in the economic cycle.

Whether you pay attention to economic news and indicators or ignore them, remain focused on your financial goals and stick to your plan. Economic downturns tend to be brief while short-term equity market fluctuations provide great opportunities for our professional fund managers to grow our investment portfolios.

1 – Globeadvisor.com (May 14, 2009)
2 – Dow Jones Newswire (May 14, 2009)



December 23, 2008

Financial Planning Notes – December 2008

Filed under: Uncategorized — MikeT @ 12:00 am

It has been a tough year for investing to say the least.  With 2008 nearing a close, major markets around the world have dropped 35 – 40+% this year (Source: Globeadvisor.com).  The steep decline in equity markets (publicly traded companies) has been broadly based leaving virtually nowhere to hide in terms of sectors or geographical areas.

Although some in the media may have you believe otherwise, this downturn is no different from any other in the past.  History has proven that the economy recovers after bad times, often led by a revival of equity markets.  Recovery takes time and patience.

It is natural to want to minimize losses in the short-run by moving out of equity investments and into cash.  The problem is timing the market, to get out early enough or back in before the upswing, is extremely difficult.  My belief is that past success in doing this is based mainly on luck.  Further, those choosing to time the market are potentially limiting their long-term return through missed opportunity.

The graph below shows the risk of not participating in the best performance days on the Canadian and U.S. markets from 1998 to 2007.  Moving from left to right, the first set of bars show the returns one would realize in the respective indexes if money was invested and held for 10 years.  The next set shows what would happen to returns if the investor removed money from the respective indexes and missed the 10 best days.  In the case of the Canadian index, the return would fall from an average annual return of 10% to only 5.7%, nearly losing 5%.  The remaining bars illustrate what happens if we remove additional best performance days for each index.

Staying Invested

Staying Invested

The point to take from this is investors can damage their portfolio’s long-term performance by temporarily moving out of equities during tough market conditions.  The best days on the market do not necessarily occur in consecutive strings, making it difficult to identify what opportunity has been missed.  Based on this, I believe keeping money invested in portfolios is the key to maximizing long-term returns.  Further, you may miss some great opportunities if you “wait for the market to recover” when adding new money to your investment portfolios.