The neighbors have a shiny new sport utility vehicle to tow their travel trailer. They take a two-week tropical vacation every winter. Their family room is equipped with the latest large screen TV and surround sound stereo system. Many people believe this is a sign of wealth. In fact, this is usually a sign of consumption.
More often than not, the above lifestyle is funded with huge amounts of debt.
As 2023 winds down and we get ready for the Holidays, Natalie and I would like to wish you all a wonderful finish to the year. As many of you probably remember, we try to match up our Christmas Holidays with the girls' winter break. This year, I will be out of the office starting on December 20th. We plan to get back to it on Monday, January 8th, 2024. Christmas is always a nice chance for us to spend quality time with our daughters. Please get in touch with us before or after this period if you need anything.
After a tough 2022, it's been nice to be able to report back that we have had a good start to the New Year with some nice gains on the market. Last year was a very tough year. Although we started out with a lot of promise going into 2022, we witnessed a full Russian invasion into Ukraine and worry about a Recession for much of the year. While we never did get the recession that so many were expecting, we did get Inflation, and a lot of it. There was fear of Rising Costs during the Pandemic and by 2022, we definitely got it.
The point of the headline is to distinguish what kind of investor you are. Do you follow storylines as described in the media headlines, or do you rely upon numbers and data to build your wealth and achieve financial independence?
If you are anything like us, you were very happy to see the end of 2020. Obviously, we didn't think that things would magically get back to normal in 2021 but we came into the New Year with some more optimism and hope. Unfortunately, we've already had our fair share of drama in the first couple months of 2021. Advances on the vaccine front have been tremendous but getting those vaccines to people has been a lot harder to do, especially in some countries (including our own). I never thought I'd live to see an angry mob attack the White House so that was something to see in early January.
As some provinces head into a second COVID-19 lockdown, some people are asking the question: Why bother investing for the long term? For many, especially Millennials, the task of building financial wealth and security looks increasingly hopeless. Even the most prudent small business owners were caught short during the lock down in the spring and many are now facing the prospect of permanently closing their companies.
When their investment savings plummeted in the 2001 stock market crash, Adam and Sonya were concerned, but not panicked. Retirement was a long way out, so they had plenty of time to recover. The couple decided to try their hand at 'timing the market' (buying and selling stocks based on expected market fluctuations) to recover their losses. "We thought that if we stayed on top things and could chart when the market would go up and down, we could make our money back," says Adam.
If you've been paying attention to business related news over the last few months, you've likely heard a lot about Interest Rates and the potential of a Rate Cut. On July 31st, we officially got news that the Federal Reserve was reducing rates by 0.25% in the United States. There was mixed reactions to this move with some wanting a larger cut but many in the know questioning why a cut was necessary at all. The US Economy has remained strong and while Global Growth has slowed down, a lot of top financial experts figured that the Federal Reserve could hold steady.
Although the economies of Canada and the United States have been chugging along nicely (with Canada at or near full capacity according to the Bank of Canada), we struggled through an awful 31 days last month on the market. It was one of the worst Octobers since the Financial Crisis of 2008. While companies are still very profitable, many aren't enjoying the stress of tariffs and trade wars. Further to this, both the Bank of Canada and the Federal Reserve have hiked Interest Rates. This puts pressure on companies and depreciates the price of bonds.
