I Have Said This Many Times Before...

History constantly reminds us that whenever the financial markets start to run ahead of themselves like this, they always look for an excuse to correct, and this time around, there were plenty of choices available:

The collapse of the Japanese yen carry trade
Rising U.S. unemployment numbers
Pullback in the “Magnificent Seven” AI stocks
High stock market valuations
Speculation on the direction of interest rates
Geopolitical events going on around the world
Upcoming U.S. elections

According to a recently published Bank of America strategy note, over the long-term, the average year will have about three pullbacks of 5% or more and one 10% correction. Even more severe stock market events are surprisingly common with one 15% market dive every other year and a 20% bear market every 3.5 years.

I am often asked by prospective clients about our investment performance. Rather than saying that we always beat the stock markets which is what they want or expect to hear, our answer is a bit more objective and much more accurate as a result. We meet or moderately beat the MAR benchmark (Minimum Acceptable Return), which is based on our clients’ tolerance and capacity for risk and their realistic goals and objectives over a three to five year period.

I also add that we guarantee two things along the way which surprises everyone. “How can you guarantee anything?’’, they ask. “That’s simple,” I say. “The first thing we guarantee is that five minutes after we buy a stock, there is a 90% chance that the stock will go down.” I pause at this point and when asked what the second guarantee is, I answer, “five minutes after we sell that stock, there is a 90% chance it will go up.” Looking at the perplexed expression on their faces, I add, “it is what happens between these two likely events that is important, not the events themselves.” In other words, the old adage holds true that it is time in the market and not market timing that counts.

Other expressions follow of course; The harsher the downfall, the grander the snapback. Volatility is the price of admission. Stock markets greatest days tend to follow its worst.

Our job, and dare I say that we are pretty good at it, is to build the safest and most comfortable financial vehicle possible to get our client to where they want or need to be down the road, filling-in the potholes and changing the odd flat tire for them along the way.

To learn more about who we are and what we do, follow this link. www.raymondjames.ca/familywealthcounseladvisorygroup

Raymond James financial advisors may only transact business in provinces and/ or states where they are registered. Follow-up and individualized responses involving either the effecting of or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, will not be made to persons in provinces or states where the financial advisor is not registered.

Information in this article is from sources believed to be reliable; however, we cannot represent that it is accurate or complete. It is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell securities. The views are those of the author, Family Wealth Counsel Advisory Group, and not necessarily those of Raymond James Ltd. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor’s circumstances and risk tolerance before making any investment decision. Raymond James Ltd. is a Member Canadian Investor Protection Fund.