January 15, 2016

2015: The Year of Words

Filed under: Financial Planning,Investments — MikeT @ 12:57 pm

The study of the history of words is called Etymology and includes the study of word origins, how words are formed and how their definitions have changed over time. Although the written word was invented in southern Mesopotamia, c. 3500 -3000 BCE, words continue to evolve every day. On the topic of words, American poet Emily Dickinson once wrote, “I know nothing in the world that has as much power as a word”. Little did she know when she penned these words how quickly the world of words would evolve. Today we live in a world where information is readily available through many mediums. But even as advances in technology have enabled us to quickly enlighten ourselves, communication and news is still driven by the words used by journalists, politicians and policy makers. As a result, it is words that will forever shape our lives, help us form opinions and provide us with the information that we need to make the decisions that affect our future.

To this end, the Oxford Dictionaries Word of the Year for 2015 is “emoji”. Yes it’s true, a pictograph that is often used to express joy, sadness, anger and mischievousness, beat out traditional letter-based expressions. While the use of the proper emoji was on our minds in 2015, so too were other words, such as the Merriam-Webster dictionaries Word of the Year which for the first time named the suffix “ism” as its annual award winner. This choice illustrated that in 2015 a commonality existed in its most searched words: socialism, fascism, feminism, capitalism, racism and terrorism. The popularity of these words reflects the impact that events such as the troubling acts of terrorism in Paris in January and November had on 2015 as well as the resurrection of the word “socialism” in the same breathe as American politics.

However, ism’s and emoji’s were not the only words that dominated the political landscape in 2015, as terms such as “Grexit” (which references the potential exit of Greece from the Eurozone monetary union) and “Migrant Crisis” (which summarizes the movement of over a million migrants and/or refugees from the Middle East and North Africa to Europe) were used throughout the year.

While the threat of a Grexit reached its climax in the mid-2015 it subsequently diminished after the Greek government accepted a three-year, 86 billion euro rescue plan from its Eurozone partners in July. With the threat of a Grexit (at least) put on hold we can now draw our attention in 2016 to a similar play on words, that of “Brexit” which refers to, the potential of Britain’s exit from the EU, which will be voted on in a national referendum to be held perhaps as early as the summer of 2016.

The end of 2015 also saw the US Federal Reserve implement the word “tightening” for the first time since June 29th, 2006, when on December 16, 2015, they increased interest rates from an upper bound of .25 per cent to .50 per cent.

While the US tightened much of the rest of the world “eased”, as the Bank of Canada (BOC), European Central Bank (ECB), the Bank of Japan (BOJ) and the People’s Bank of China continued to maintain their easing biases.

In 2015 it also wasn’t just linguists who chose to create and popularize words; other organizations such as the National Football League coined words such as “Deflategate” (created to enlighten football fans on the amount of air pressure required to inflate NFL game ready footballs), while pop culture popularized the word “Yas” to vocalize ones approval of the subject at hand.

Like any year, 2015 had its share of highs and lows. It was a year that according to a report from the National Oceanic and Atmospheric Administration saw average temperatures in the US rise to the second highest level on record (only 2012 was hotter), marking the 19th year in a row that average temperatures have exceeded the 20th century average.

It was a year where the words used by global leaders such as Angela Merkel commanded the spotlight while others used by US presidential hopeful Donald Trump perplexed us. It was a year that on August 24th saw the Dow Jones Industrials Average have its biggest fall in four years, plunging more than 1,000 points at the open to eventually settle down 588 points on the day. And, as a result, saw the increase in the use of the word “volatility” by the financial press.

And finally, 2015 was the year that the “Force” finally “Awakened”, giving young and old alike, a new (and old) set of heroes to cheer for.

July 1, 2015

A Greek Tragedy

Filed under: Financial Planning,Investments — MikeT @ 12:52 pm

Now that the first half of 2015 is in the record books, it is a perfect time to reflect on what has happened so far and contemplate what the rest of 2015 will bring. Movie buffs will remember how “Back to the Future Part 2″ depicted 2015 – with flying cars and fusion power, which back in 1989, when the movie was produced, seemed ridiculously farfetched. While we may not yet have flying cars, 2015 brought the FIFA Women’s World Cup to Canada, and made it the runaway hit on our “smaller screens”.

The first half of the year also saw the retirement of another small screen icon. David Letterman retired from his late night show in May after a 30 plus year run. We also saw the release of Canada’s federal budget in April which, among other things, increased the amount that Canadians can contribute to their Tax Free Savings Account from $5,500 each year to $10,000. Yes the first half of 2015 has certainly had a little something for everyone. There have been ups, downs, and a lot of drama.

Greek politics once again dominated the headlines in the second quarter with each new deadline to repay its creditors and introduce new austerity measures coming and going, without resolution. While growth throughout the Eurozone was showing signs of a modest recovery prior to the latest “Greek Tragedy”, following the introduction of Quantitative Easing, the sustainability of that recovery is now in question given the escalation of the Greek crisis and potential contagion.

However, it must be said that despite the return of volatility in financial markets in Europe, the direct impact from a default on Greek debt is much less today than in 2012, as European bank holdings of Greek debt are only a fraction of what they once were. As well as the financial condition of peripheral countries such as Spain, Italy and Portugal have improved significantly over the last few years.

Perhaps overshadowed in the second quarter by Greece, was China. After the Shanghai Composite index rose approximately 150% from June 2014 to the middle of June 2015 it decreased sharply, causing concerns about the Chinese economy going forward. Should the economy not stabilize, it is expected that China will continue to introduce stimulus measures in a controlled and directed manner to try and achieve its targeted 7.0% growth rate.

Meanwhile, the United States remains the single bright spot in the global economy with solid economic data, albeit with a softer than expected start to the year. The timing of the Fed’s first rate hike remains the subject of continuous debate. Given the data-dependent nature of the decision and the recent firming of data points, it is expected that the Fed will begin to moderately raise the Fed Funds rate by year-end, assuming the Greek crisis is contained. The Fed’s ability to balance the gradual tapering of monetary stimulus without interrupting the U.S. recovery, or damaging investor sentiment, will be a key driver of the U.S. economy and equity markets.

The situation in Greece is not new to the Eurozone and Greece is not the only country to require aid from Eurozone members who seem intent on keeping the union together and in avoiding the spread of contagion to other countries. However going forward, it is likely that any headline news event will result in increased volatility in financial markets. Just imagine what the introduction of the first flying car will do!

February 4, 2011

2010 Tax Season

Filed under: Financial Planning,Taxes — Tags: , — MikeT @ 10:16 am

It’s tax time again!  I hope you’re as excited as I am.  It’s a great time to look at your entire financial picture and determine ways to cut your annual tax bill, freeing some cashflow to help move closer to your financial goals.

I’m happy to help with your tax preparation and filing needs – contact me to arrange or click here for details.  Don’t leave it to the last minute!



May 31, 2010

Your Most Valuable Asset

Filed under: Financial Planning — Tags: , , — MikeT @ 5:03 pm

As a financial planner, I’ll admit that insurance is not the most interesting topic.   Not surprising; who really wants to talk about death, critical illness or being disabled!?  For fear of losing you too quickly, I’m going to throw out some stats to think about:

  • 35yr olds have a 50% chance of disability lasting longer than 90 days; 40% for 45yr olds (1)
  • the average length of disability for a 35yr old is 2.8yrs; 3.2yrs for a 45yr old (1)
  • 1 in 4 Canadians will develop heart disease during their lives; with 1 in 2 before age 65 (2)

Canadians tend to consider life insurance before disability insurance but I think the above stats show why it’s also important to purchase disability insurance or make sure the coverage you currently have protects you properly.  Many people fall into the latter, where they already have coverage at work, but the policy payout isn’t enough to cover monthly family expenses or it only covers for 2 or 3 years (not to age 65 like you may need it!)

A colleague of mine recently shared her own personal experience with her husband’s disability.  He worked for a large company in the oil & gas industry and was given group benefits that included disability insurance as part of his typical employment package.  One day he was involved in a car accident that left him disabled and unable to work.  His group disability policy covered him for two years after the accident but that was it.  Without his pre-disability income or disability coverage, my colleague’s family struggled to make ends meet.  Canada Pension Plan payments, which took over four years to get approved, helped to replace some of the missing income but even that wasn’t enough.  It has been over twenty four years since the accident and he still is unable to work.

Having the proper disability coverage in place would have helped this family avoid the financial hardships they experienced as a result of the accident.

Many people would say their house, cottage, or retirement portfolio is the most valuable asset they have but I would argue it’s their ability to make a living.  If you or someone you know feels that they would benefit from a disability insurance coverage review, I am more than happy to help.  I recommend that this be reviewed as soon as possible.

(1) 1985 Commissioners Individual Disability Table A
(2) Heart & Stroke Foundation



February 16, 2010

2009 Market Recap

Filed under: Financial Planning,Investments — MikeT @ 7:37 pm

So how do you think stock markets performed in 2009? If you’re like 74% of investors in a recent survey, you thought the S&P/TSX was flat, down or you didn’t know (1). Only 14% in the survey actually knew the S&P/TSX posted a return over 20% (1). In fact, our major Canadian stock index posted 30.7%, its best return since 1979 (2 & 3). Although I don’t have a survey or any stats to prove my theory, I believe that investors were far more cognizant of poor market performance in 2008 when the S&P/TSX’s return was -33% (2). I’m sure the media is to blame for much of investor’s knowledge of market conditions, with their tendency to focus and trumpet the negative as oppose to the positive.

For the record, the S&P500 (a major U.S. index) and the MSCI World index produced returns of 23.5% and 27% respectively (2).

At the end of the day it really doesn’t matter if you’re up-to-date with market returns as long as they don’t swing your emotions enough to make trading decisions. Investors that get caught up in emotions are more likely to make investment decisions that lead to timing the market, resulting in buying high and selling low.

Reviewing your portfolio annually in conjunction with your financial plan is the best way to support long-term financial health. Evaluating performance and matching it to your financial goals will ensure you remain on the financial path mapped and will help eliminate the emotions involved in investing.

(1) Angus Reid Survey Results (Jan 5, 2010)
(2) globeadvisor.com
(3) Bloomberg