That's not me. It's John Oliver. More on him in a moment.
First, a warm welcome to all new subscribers.
As measured by the S&P500 index, the market is little changed since my last email to you in early April. Last week was quite volatile. Growing economic strength in the US is stoking inflation fears. Things are obviously different in Canada. Our "re-opening" is behind the US but we have housing price inflation and a strong Canadian dollar. Longer term, I worry about the mountain of debt that has been built up, mostly federal and provincial government debt but also corporate and personal.
I am surprised we haven't had a significant market pullback in the past 14 months. It could happen any time. But, whichever direction the market turns in the short run, I believe stocks will continue to deliver good returns to patient investors in the long run. As always, make sure your overall asset allocation represents a suitable balance of long term opportunity and downside protection (Chapter 9).
Speaking of downside protection, here is something to keep in mind. Most investors use bonds, bond funds (or the bond portion of balanced/all-in-one funds) as the "wealth protection" component of their portfolios. Bonds usually perform well when stocks decline. However, inflation may cause interest rates to rise just as the stock market declines. Rising rates will push bond prices lower. So stocks and bonds may decline at the same time. Remember that interest rate increases impact long term bond prices to a much greater degree that short term bonds. So, short term bonds and GICs provide much better wealth protection than longer term bonds in a potentially rising interest rate environment.
Back to John Oliver. A couple of years ago he did a hilarious and very scathing episode on investment fees on his HBO show. He uses US terminology (401k = Group RRSP) but you will get the message. If you want a few laughs check it out. WARNING: this video is peppered with VERY colourful language and is not for everyone.
Investor Advisory Service
I remain committed to helping all Canadians learn about lower cost DIY, AIY and Robo investing through my book, emails, webinars, speaking engagements, etc. But, as announced a few months ago, I am personally advising a small number of clients based on the principles described in Beat the Bank. This service is best suited to investors with portfolios in excess of $1 million. All of my clients are benefitting from very substantial fee savings. If this service might potentially be of interest to you, just reply to this email and we can discuss.
Finally, thanks to you for spreading the word about Beat the Bank which continues to help thousands of Canadians invest smarter.
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Your Market News update for May 30, 2019 | View online Market News News that's moving the market now As Trade-War Worries Linger, Market Seems to Lack Buying Conviction May 30, 2019 8:40 AM | JJ Kinahan 6 min read | Daily Market Update