“May you live in interesting times” is an English expression popularly misattributed as an ancient Chinese curse. While its interpretation could fall on either side of the “glass half full/half empty” metaphor, historically its interpretation falls on the negative side - a curse - meant as an era of turmoil, tumult, upheaval and strife. Digging deeper historically, its origin is likely in the early 20th Century, not ancient, and from the West, not Asia. Today’s world story-l

“It was the best of times, it was the worst of times….” Thusly we started our editorial in the Spring 2023 issue….quoting the opening lines from Charles Dickens’ A Tale of Two Cities in 1859. Fast forward to lyrics in 1967 from the Rascals Band: “How can I be sure...in a world that’s constantly changing?” So many people, places and things to worry about. Lastly, our least favourite pithy statement “This time..it’s different!” We frequently have shared with you the grounded wi

Our client portfolios continue to benefit from robust growth in global equity markets, as well as stable returns in our bond portfolios. Over the last 1 1/2 years, our portfolios have seen mostly double-digit returns (ranging from 8.8% to 22%), for equity proportions between 45-65%. Over that period, the equity portion has averaged 18% and the fixed income portion 6%. Over the last five years, portfolios with an asset allocation plan of 40% fixed income and 60% equities have

D espite ongoing global uncertainty, driven by U.S. tariff policies, recession fears, and a relentless cycle of negative media headlines,...

There is no doubt that investor anxiety has become the predominant theme since the ongoing, and constantly changing, series of proposed US tariff policies and opposing court challenges. With this anxiety has come increased volatility in global financial markets. As we have discussed in the past, volatility is both down and up. Portfolio returns have remained strong over the last year across all asset classes, as you will see elsewhere in this issue. While positive returns “ba

Investing Update Foresight had to take a forced “sabbatical” due to the national postal strike, and skip the Winter issue. Since the Summer issue, the equity markets have been buoyant. Rolling annual returns were negative from June 2022 through February 2023. They jumped into healthy returns from June 2023 and have been steadily double-digit from May 2024 to the end of the calendar 2024. The components of portfolio construction- fixed income and equity markets- both experienc

As we look forward through the Fall of 2024 to the prospects for 2025 and beyond, we think it is worthwhile to first look back at where we have come from over the last 5 years. In the summer of 2019, the then-current bull market was over 10 years old and, although we did not know when it would end, we certainly did not expect it to end with a global pandemic in February/March of 2020. Imagine in the summer of 2019 that an investor was given a forecast that in the next 6 to 9

Global equity markets had a very strong end in 2023 and continue to be the major driver of portfolio returns over the first five months of 2024. The following table is a sample of some of our larger equity sector ETF returns YTD and twelve months to May 31st. Exchange Traded Fund returns to May 31/2024 12 months Year to Date BMO Low Volatility Canadian Equity CAD (ZLB) 8.3% 4.5% Wisdomtree US Total Return Dividend USD (DTD) 22.5% 8.1% iShares Japan Fundamental Index CAD (CJP

As we look forward through 2024, we see a number of potentially positive trends for our portfolios. Even if interest rates stay higher, bond portfolios are enjoying significantly higher yields in the 4-5% range, up from near 0-1.5% not long ago. This increase in yield for the fixed income side will have a significant positive impact on overall portfolio returns. Higher interest rates also have a negative impact on valuation multiples in the stock market, especially for high-y

The Fall 2022 Foresight discussed our expectations for volatility in financial markets (both up and down) to be a major theme going forward, as markets adjusted to the higher interest rate environment. A year later, we expect that theme to continue. Both the TSX Composite and US S&P 500 have had multiple swings of 5% or more through 2023, masking the fact that both markets are up year-to-date (TSX-4% and S&P 500-18%) - a reasonable-enough performance, given TSX earnings are

As we continue to wait for one of the most predicted recessions in recent memory, we think it important to put perspective on the frequency of economic recessions versus the fear of recessions. A recession is defined as a period of two or more successive Quarters during which a country’s GDP declines. Looking back over the 30 years since 1994, there have been three recessions in the United States and two in Canada. In total over the last 30 years (360 months), the US economy

On June 7th the Bank of Canada (BoC) raised its key overnight lending rate 25 basis points to 4.75%. The move surprised market-watchers and quickly produced renewed forecasts for an impending recession in Canada. A tremendous amount of angst has been created by a .14 of 1% interest rate increase. Why did the BoC feel it was necessary to jolt the market with a largely unexpected interest rate increase? The most recent inflation data showed a slight uptick of .1 of 1%, which ha

We recently attended the Vancouver 2023 CFA Financial Forecast dinner featuring as the keynote speaker Mark Carney (the former governor of the Bank of England and the Bank of Canada). It was very interesting to hear his views on the global economy, interest rates, inflation and the various recession themes being forecast. Although he does agree that we may be nearing the top of the rate hike cycle in Canada and the United States, he does not see these central bankers cutting

The financial market volatility we referenced in our Fall Foresight is unfolding as expected and likely will continue into early/mid 2023. Current volatility aside, we are very encouraged by developing long term major trends as we move into the next economic cycle. We see the potential in: Major capital spending in renewable energy to combat climate change Renewable energy generation and energy storage are major components of the investment spending to decarbonize energy crea

Financial asset price volatility remains the theme for 2022 as we move into the Fall. When one raises the topic of price volatility it often carries a negative connotation. However, volatility swings both ways; while rising prices are seen as positive, not as volatility, falling prices are seen as volatility! Thus far in 2022 we have seen healthy doses of volatility in both directions. At writing, the current direction is up for equity markets, recovering from a recent June l

The first half of 2022 has seen global equity markets correct and inflation return to levels we haven’t seen in decades. Covid lockdowns continue to disrupt the supply chain, especially in China. The Ukrainian conflict has disrupted energy supply as well as agricultural planting in one of Europe’s major bread baskets. Growth stocks and the technology and biotechnology sectors have been particularly hard hit, falling as much as 35% off their recent highs. We have been using th

Market volatility in both global stocks and bonds has been the theme so far in 2022. Global supply chain issues caused by the ongoing battle with the various variants of Covid has resulted in decades-high inflation being experienced in food, energy, labour and materials costs. It has been a race to see which economist can correctly forecast the number of Bank of Canada and U.S. Federal Reserve interest rate hikes over the next 18 months. A considerable amount of angst may ari

Environmental, Social and Corporate Governance (ESG) issues are taking a larger role in the decision-making process for investors, investment managers and corporate boards. Blackrock’s iShares is our largest exchange traded fund provider. It’s Founder and CEO, Larry Fink, announced to shareholders 3 years ago that Blackrock would be holding corporate boards accountable to the ESG initiatives of climate risk, improved disclosure and accountable, transparent capitalism. With ov

It is hard to believe we are almost 18 months into a new and unexpected bull market. Equity markets have surprised on both the speed of their recovery and the valuation levels they have reached. We would be ingenuine if we were to say we expected the US S&P 500 Index to double from its March 2020 bear market low of 2200 to over 4400 in August 2021, a level that is 30% higher than the February 2020 pre-pandemic all-time highs of 3390. Post our portfolio rebalancing and equity

Although global economies continue to struggle to find their way through the current health crisis, global equity markets remain very robust and, in most cases, at or near all-time highs. It is not surprising to see equity markets rebounding sharply from the Bear Market lows of March 2020; however we are very pleasantly surprised to see global equity markets above pre-pandemic all time highs. As a proxy for global equity markets, the iShares MSCI World Index ETF (XWD) is 9.9%