Is My Portfolio Safe?

“What’s with the markets? Is my portfolio safe?”

Last week sparked some concerns among investors & we’ve received a few calls from clients checking in. I am happy when I get questions & calls as it allows me to talk about what’s happening and assure clients about our approach.

If I can communicate one thing during times such as these, it would be that sticking to your long-term strategy is your best way to protect your portfolio. Rest assured that if we feel adjustments should be made, we will always consult with you and recommend any necessary changes. Keep in mind that you have professional money managers working for you. These managers are at the top of their class and we have the utmost confidence in them as they go about managing the funds in which you’re invested.

It has been seven years since the first rumblings began and markets eventually entered the infamous period of the financial crisis. Last week sparked renewed worry among investors as volatility showed its face once again in dramatic fashion when the S&P/TSX index surpassed official correction territory marked by a downturn of greater than 10%.

“What is driving the change?”

The heightened volatility is being driven by the following:

  • plummeting oil prices
  • a weakening outlook on the global economy &
  • widespread concern about insufficient policy actions by the governing officials in the Eurozone.

For the past number of years we have been enjoying euphoria as equity markets have continued to rise and impressive annual returns have been a regular occurrence. It seems reasonable that a correction was needed and to many it was long overdue. Markets in the United States haven’t seen a correction in almost three years and the Canadian market was looking overheated, particularly in the energy sector.

David Wolfe, portfolio manager at Fidelity Investments commented “Corrections are part of the normal market environment. What we do know is that this has happened before in markets, it will happen again in markets and in the meantime, the key message is don’t panic.”

Alfred Lam of CI Investments Consulting thinks the short-term volatility is noise and investors should focus on:

  • stock valuations are better than fair
  • corporate earnings are still growing
  • companies continue to return cash to shareholders
  • corporate balance sheets remain healthy

While no one can predict how prices will move in the short-term, there are a number of circumstances that remain supportive of markets, including low interest rates, strong corporate earnings and a strengthening North American economy.

Inherent in each of our client’s portfolios is a diversified mix tailored to their individual objectives. Although changes at times do need to be made based upon product and class, the best way to weather any storm is to stick to your long-term view and remain invested.

Please call me should you like to discuss your investments at any time. Rest assured, we are working daily to achieve your long-term financial goals.

Nicholas Hounsell
Principal & Managing Partner
Bloom Wealth & Legacy Planning

The information in this blog was derived from various sources, including CI Investments, Fidelity Investments, Bloomberg Reuters, The Globe and Mail, National Post, Financial Times, and Malcolm Morrison of the Canadian Press.

Insurance products (including segregated funds) are offered through multiple insurance carriers.

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