The 10-Year Seduction

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A 10-year phenomenon is getting ready to poke its head up again. Anytime a market (or markets) has a correction two things can be noted.

  1. 10 years after a market peak, the ten year returns of mutual funds, segregated funds, pension plans, indices and ETFs are at the low end of 10-year returns. The TSX is just 5.7% higher than it was from the peak almost 10 years ago.
  2. As we go past this peak, we will see the 10-year returns getting higher and higher because the starting point is getting lower and lower. Once you hit the 10-year anniversary of the bottom in 2019 the measurement will start at a position up to 50% lower than the current start point. The TSX hit the bottom in March 2009 and is currently up 112%.

My clients didn’t get hit like the index corrections because of good mutual fund, stock and bond selections. Too many articles simply quote an index’s return to show history and little to no attention is paid to what an advisor did for their clients to protect the downside and participate in the upside with lower risk than an index.

As an advisor, I have lived through this in the 80’s, again at the turn of the century (it took over two years to hit the bottom), and here we are 10 years after the last cycle peak. This will happen again in the future and knowing how to be positioned correctly will maximize your return for your risk profile.

Our office continuously brings portfolio managers to our board room and put them through their paces. We do so much more than just follow a fund’s history. Once my research is completed, then the decision is made whether they deserve the right to manage some my client’s money.

The 24-hour News Cycle

With the 24-hour news cycle, headline sensationalism and biased short statements on Social Media it will be hard to stay on course for the average investor. This continual pounding on investors’ senses causes emotions to creep in and as I wrote on April 2015 “emotions in investing is just gambling”. These controversial sound bites make for good ratings, but not good advice.

Incredibly average funds will look like they have outperformed over long term for their investors. Compare this to their peers and you will be at the start of your research.

Having independence and all products available to your advisor is tantamount as I can only do the job correctly if I have the right tools.

Your Independence Matters

Terry McIntyre is an Independent Senior Investment Advisor with Manulife Securities and can be reached at: 905-896-9060, ext.3838, email: Terry.McIntyre@manulifesecurities.ca or website: www.terrymcintyre.ca

This material is not to be construed as an offer or solicitation. The securities mentioned may not necessarily be considered suitable investments for all clients. Contact your Investment Advisor to discuss your individual investment needs.