We are in a new era of heightened volatility caused by the many uncertainties currently permeating the global economy:
1) Fiscal Issues in Europe
2) Moderating economic growth in China and the US.
3) Rising interest rates and a declining housing market in Canada
4) Consumers more interested in saving
5) Record levels of corporate cash, sitting idle.
2) Moderating economic growth in China and the US.
3) Rising interest rates and a declining housing market in Canada
4) Consumers more interested in saving
5) Record levels of corporate cash, sitting idle.
On April 29th I asked you if you were prepared for that volatility. If you were our clients you were.
The ETF SPY (S%P 500) dropped 17.19% from its high on April 26 to its low on July 1st.
Over this same time period our diverse and well-balanced model (60% Equity, 40% Bonds and Preferred shares) fell approximately 7.41%.
In fact, 2010 to date, the SPY is down 4.29%, the XIU (TSX 60) is down 1.92% and our model is up 2.16%.
Keeping volatility low in a portfolio is the key to capturing long term growth. The key to keeping volatility low is to have balance and diversity in a portfolio:
Across asset classes, geographical economic zones, economic sectors and company size.
Across asset classes, geographical economic zones, economic sectors and company size.
Keeping correlations between these different investments as low as possible, so that they do not necessarily move in concert with each other.
In his most recent Global Economic Monthly Review, Neil Soss, well-known economist at Credit Suisse suggests that the era of rare, brief and mild recessions experienced from the early 80’s to the mid 2000’s is over:
“expect …more frequent slowdown and speed-up scares” and “expect the slowdown scares to be scarier.”
In other words volatility is here to stay, so “buckle-up” and immunize your portfolio as best as is possible.
This is where our expertise lies: minimizing the impact of volatility, so that growth can be achievable.
We also look closely at the impact of taxes on a portfolio, maximizing the opportunity to reduce them and add value to the after-tax growth.
Make sure that you are maximizing all the opportunities available to you to get the growth that you need. We can help.
