Insights: Used car prices, volatility, dollar cost averaging + Friday the 13th
Good reads:
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·????????Weekly Investment Strategy
·????????20 lessons learned
·????????15 of the Craziest Charts Right Now
·????????If you thought the CRA wouldn't follow up on improperly claimed CERB and other benefits, think again
·????????The rising tide of senior surfers
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Best quote of the week:
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"You pay a very high price for a cheery consensus. It won't be the economy that will do in investors; it will be the investors themselves. Uncertainty is actually the friend of the buyer of long-term values." – Warren Buffett
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In the media:
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Inflation keeps coming in hot and interest rates are on the rise, but the economy is holding strong. In my latest TV interview, I talk about what I see as the biggest risk to the global economy and I walk through some of the interesting investment themes I’m seeing amidst all the volatility. Watch it here:
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Best soundbites of the week:
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In a world filled with plenty of negative news headlines, here is a good one: used car prices are finally falling.?
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You may ask, “What does this have to do with me?”?Well, many are viewing this as an indication that we may be at or near peak inflation. ?In other words, we could see inflation start to cool a bit soon, which of course would be welcomed news for the markets (and everyone).
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“According to the Labor Department, prices for used cars and trucks fell 0.4% in April from the previous month. This is the third month of price declines for used cars, which fell 3.8% month-over-month in March and 0.2% in Feb…now that used-car prices are on the decline, some believe that other items in the CPI will follow suit. According to Mark Zandi, chief economist at Moody’s Analytics, the decline in used-car prices shows that the continuing supply-chain issues heating up inflation are starting to subside. In his view, car prices surged because of issues like chip shortages and supply-chain problems, and the fact that they are falling now is an indication that supply chains, though still not where they should be, are starting to improve. If that’s the case, prices could start falling for other products as well. “I think the used vehicle price decline is the first real indication that goods price inflation is about ready to roll over,” Zandi says. – Barron’s article
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Some good points from my Raymond James analysts regarding the current market situation.?Especially noteworthy given this week’s volatility:
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Our view: The recent surge in volatility in 2022 is the result of several factors including: 1) stubbornly high inflation; 2)?policy normalization efforts by central banks globally (e.g., the US Federal Reserve, Bank of Canada, etc.); 3) the ongoing Russia Ukraine war, and the related global sanctions which followed the invasion; 4) COVID-19 lockdowns; and, 5) a deep slowdown in the Chinese economy, which is the second largest economy in the world.
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Since the beginning of the year, we have stated that, while a repeat of 2021 market performance was unlikely, we expected markets to head higher, but follow a much more choppy path than in 2021, as extreme COVID-19 policy measures/levels of accommodation begun to unwind. However, that said, we remind investors that the Canadian/US economies are in relatively good shape versus the rest of the world economies – the cleanest dirty shirts in the laundry – with economic growth still expected to rise above trend in 2022 and grow at a more normalized pace in 2023 rather than contract. As well, the employment rate has rebounded above pre-pandemic levels with corporations on both sides of the border in relatively good financial shape. For the S&P 500 and the S&P/TSX indices, we are expecting above trend earnings growth in 2022 and trend growth in 2023. And following the sell-off in markets globally since the beginning of the year, equity valuations also appear way more attractive than at the start of 2022, and are supportive of our constructive view for US and Canadian equities to outperform many of their peers/markets globally in 2022.
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While it may be difficult to see the bigger picture amid all the uncertainty, here are a few certainties to share with investors:
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·????????It pays to stay invested - avoid the temptations to time the market; it’s a losing proposition for even the smartest minds (e.g., Long-Term Capital Management).
·????????Ignore the headlines/noise and remember to be “fearful when others are greedy, and greedy when others are fearful” – Warren Buffett.
·????????Stay rational when markets/investors appear to be behaving irrationally.
·????????Ignore your emotional tendencies and stick to your plan; otherwise, you may end up buying-high & selling-low.
·????????Volatility/market sell-offs should be expected and are NORMAL even during broader bull market cycles!
·????????Diversification + Asset Allocation = J
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Contact me for a full copy of the report: [email protected]
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Best visual of the week:
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I’m often asked by investors whether it is better to make automatic, regular investments (e.g. monthly, bi-weekly, etc) or should they save and do one lump sum every year. If you’re able to manage it, using a dollar-cost average (DCA) strategy is the best course of action.?You tend to receive a better average price over the period you deploy your cash.
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RJ 5K 4 Kids in support of Drug Free Kids Canada & Little Warriors:
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领英推荐
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I’m participating in the RJ 5K 4 Kids - a virtual fundraiser that my firm?Raymond James?is putting on in support of?Drug Free Kids Canada and Little Warriors.
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Drug Free Kids Canada is committed to raising awareness of the dangers of problematic substance use. DFK educates, engages, and empowers parents to help ensure that all young people will be able to live their lives free of substance abuse and addiction.
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Little Warriors is focused on the awareness, prevention and treatment of child sexual abuse. They also advocate on behalf of and with child sexual abuse survivors.
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You can support my cause by making a donation at:
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I’d love to hear from you!
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Do you have a question about the markets??Or perhaps you’d like to know more about a particular financial planning topic??Maybe you’ve got a question about your own personal situation?
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Let me know your question and I’ll include it as a topic in an upcoming newsletter: [email protected]
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Beyond the markets:
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Today is Friday the 13th and that can be a scary day for a lot of people.
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The good news for investors is that Friday the 13th hasn’t historically translated into market disaster.?In fact, historical performance on a typical Friday the 13th hasn’t been much different from any normal trading day.?Over the last 10 years, there is a 52% chance the market will be positive on a Friday the 13th.
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I have an interesting story about New York Stock Exchange floor traders and Friday the 13th though.
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Apparently traders used to turn every Friday the 13th in “Hat Day”.?They would show up to work wearing ridiculous hats to supposedly scare away evil spirits that might spook the markets.
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They did this every single Friday the 13th …up until 1987.?
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Why did they stop in 1987??Well, as the story goes, traders were so depressed after the October 1987 market crash that they weren’t up for celebrating “Hat Day” when Friday the 13th rolled around a month later.
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Recognizing that all the traders were depressed, New York Stock Exchange executives decided to change “Hat Day” into “Survivors Ball”.?So for the opening bell ceremony, the Chairman, Vice-Chair and President showed up wearing oversized sombreros.
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It cheered everyone up…until the press decided to write an article about it.?They titled it “The Fat Cats in Hats”.?
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And that was the end of “Hat Day” (and the Survivors Ball!)
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Thanks for reading and wishing everyone a great weekend!?
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Cheers,
Kim
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Kim Inglis, BCom, CIM, PFP, FCSI, CAFA
Portfolio Manager
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T: 416.777.6417 (Toronto)
T: 604.654.1160 (Vancouver)
T: 250.979.1803 (Kelowna)
TF: 1.877.363.1024
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The opinions expressed in this newsletter are those of the Financial Advisor Kim Inglis, BCom, CIM, PFP, FCSI, CAFA and not necessarily those of Raymond James Ltd. (“RJL”) or Raymond James (USA) Ltd. (“RJLU”). ?Statistics, factual data and other information presented are from sources, believed to be reliable but accuracy cannot be guaranteed. It is furnished on the basis and understanding that Raymond James Ltd. and Raymond James (USA) Ltd. is to be under no liability whatsoever in respect thereof. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Raymond James Ltd. and Raymond James (USA) Ltd. financial advisors may only transact business in provinces and/or states where they are registered. Follow-up and individualized responses involving either the effecting of or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, will not be made to persons in provinces or states where the financial advisor is not registered. Raymond James Ltd. is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor Protection Fund. Raymond James (USA) Ltd., member FINRA/SIPC. This provides links to other Internet sites for the convenience of users. Raymond James Ltd. is not responsible for the availability or content of these external sites, nor does Raymond James Ltd endorse, warrant or guarantee the products, services or information described or offered at these other Internet sites. Users cannot assume that the external sites will abide by the same privacy policy which Raymond James Ltd adheres to.