Is it time to go shopping?

Published by on

Investing correctly for the times

I was at a Mississauga Board of Trade event a few days ago and met a gentleman who is at a crossroads with what to do with his advisor. He invested with this advisor who states that they were risk adverse. He felt they were kindred spirits.The longer he is with this advisor, the more he understands that this advisor is simply afraid of the markets.

Understanding Markets and the History of Markets

As you know, you have to understand the risk/reward ratio just to get started. You have to understand markets and economies as well as historical trends. To have basically missed the whole recovery we have just had is unconscionable. To not understand we were the start of a rising equity market, and to be mostly in cash, paid a disservice to this client. An advisor must know how to protect for downside risk and still get growth. An advisor must also be able to communicate with you.

Why are you in medium and long term Government Bonds?

I continue to find investors whose advisors have them in medium to long term Government of Canada bonds, yet have been hiding from the equity markets. While you know my thoughts on missing out on the last 5 years on the equity markets, being in medium to long term Canadian Government bonds is where the high risk is.

When I was with a different firm I sent a letter to my clients 5 years ago warning them about the fact that they will, at best, either make almost no money in these bonds going forward or lose money. I stated that interest rates had hit the bottom and for the first time in 30 years rates will be working against us. When rates do eventually rise, the value of these bonds will go down. A long term negative return for long term Government of Canada bonds. Now that’s risk.

In my business we must pass all such communications by the compliance department. The communication I sent was approved as originally written. Several months later an audit found my wording too strong and they stated it should never be approved because the headline used the work Beware. Such hogwash.

The audit did not dispute the facts stated, just that the language was too strong. This language was a call to action for my clients and we were able to intelligently adjust their portfolios for solid returns for the next 5 years and counting. If your advisor does not understand markets, is scared to make a measured balanced well informed decision or simply is doing what has worked for bonds for the last 30 years, it’s time for you to go shopping.


If you want to see what a truly independent advisor can do for you, call me at 905-846-9060, ext.3838, email me at or visit my website at