Tag Archives: investments

Financial Markets

What is going on?

Financial Markets

What’s going on in the markets these days? When will the drop in oil prices end and start to make a recovery? Where is the bottom for equities? Are bonds and GICs safe? What sort of damage are the current economic conditions doing to my RRSPs, TFSAs, RRIFs, and Investment accounts? I’m sure that many of us are asking ourselves these questions. Many are concerned about the future of their investments and it’s no wonder. As an individual, where do you think the price of oil and the equity markets will be in 2 years time? Do you think they will be higher than they are today? If so, that means that we are in a time of great buying opportunity.

There was a very good article in the Financial Post section of the Edmonton Journal (and I’m sure the Calgary herald as well) on February 8th, 2016. It was written by Peter Dobson, CEO of 5i Research Inc. The article is entitled ‘Time to go Back to Basics’. I thought it was a very good article about market timing, dividends and the value of investing in a down market. I would urge all investors (especially during this volatile time) to read this article. I think you will find it very worthwhile. The portion of the article that captured my attention dealt with “time in the market” vs “market timing”. It dealt with a Business Insider report that looked at how important the big up days in the market were to investment performance. In a 10-year period (2003 -2013) a buy and hold strategy returned 9.2%. If you were out of the market on the 10 best up days, return dropped to 5.5%. If you missed just 60 days in that 10 year period, your return dropped to negative 4.4%. Wow!

If a person is trying to time the market, it would be best not to miss any of the good days.

– Jim Galpin

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Today’s Investment Environment

Today's Investment Environment

In today’s investment environment, it is becoming more of a challenge to find options that provide a safe, steady and increasing rate of return on our investments. Over the course of the last 6 months, we have seen a lot of volatility in the equity markets — particularly in the resources, energy, and materials sectors. Other sectors within the global markets have maintained some growth through this period. We once thought bonds were safe havens for investments during turbulent times, but in recent years we have seen the rates of returns on bonds diminish with prolonged lower interest rates. When interest rates rise, the bond yields will diminish further. GIC’s used to be the choice of shelter, but with the current interest rate environment, combined with our inflation rate, the returns are mainly non-existent. I am of the opinion, particularly during these times of volatility and plunging equity markets, that the best course of action is to make sure our investment portfolios are well diversified among the sectors of the markets that provide for reasonable growth, along with some protection on the downside. It is very important to make sure our investments are reviewed periodically to maintain this objective. Have confidence and trust in the people who provide you with investment advice, as well as the managers responsible for the investment decisions on the funds they manage. Once this is in place, be certain to “stay the course”. I am just a phone call, text, or email away. Please don’t hesitate to contact me if you wish to review your investment portfolios, share your concerns, discuss alternative options, or discuss investment strategies for the future.

– Jim Galpin

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