Dear Valued Client,
“We don’t have to be smarter than the rest. We have to be more disciplined than the rest.”
– Warren Buffett, chairman and CEO of Berkshire Hathaway.
Aloni Goh Wealth Strategy Notes:
Equity markets continued the corrective phase as forecasted. At this point, the bears and the doctor dooms are once again calling for a disaster scenario. We do not agree with them. In fact, we expect a bottom forming soon, which will then set up a base for which a year-end rally will commence. In investing, it makes more sense to be an optimist, as equity markets tend to rise over the long term.
There will be periods when the markets undergo very substantial and protracted declines, such as during the Great Depression almost a hundred years ago. While there is certainly a possibility that it could happen again, we think there are quite a few more years left in this long-term bull market before the probability that such an event may occur and rises to a level where drastic protective measures need to be taken.
Further Reading:
Stocks and bonds don’t always go up. That’s the hard truth about investing. You’ve seen it firsthand in one of the most extreme cases in recent memory with the Covid crash and the subsequent rally. It’s been a tough year in the markets in 2023 with significant bouts of volatility, including a 3.7% decline in the TSX, a 3.5% decline in the Dow and 4.9% for the S&P 500.
During times of volatility, it’s important to focus on your long-term goals and not the day-to-day fluctuations. Studies have shown that time in the market beats timing the market, and that making decisions based on emotions is often a losing strategy. The key is to stay invested. As a report from the American multinational firm BlackRock writes, “… giving in to fear is often a losing strategy. More often than not, investors with this mindset tend to buy high and sell low as they invest more in a rising market and pull money out in a falling market.”
For illustrative purposes only.
This chart illustrates that riding the ups and downs of the market can be an emotional rollercoaster. Investors may be thrilled and confident when markets are soaring, leading them mistakenly to buy high. On the other hand, they can become nervous and panicked when markets fall, causing them to sell low. The key takeaway: focus on your long-term goals.
Growth of $1k in the S&P 500 since 1926 (1/1/26-12/31/21)
Source: Morningstar, National Bureau of Economic Research, and BlackRock, as of 12/31/21. Past performance does not guarantee or indicate future results. It is not possible to invest in an index.U.S. stocks are represented by the S&P 500 Index from 3/4/57 to 12/31/21 and the IA SBBI U.S. Lrg Stock TR USD Index from 1/1/26 to 3/4/57, unmanaged indexes that are generally considered representative of the U.S. stock market during each given time period. Index performance is for illustrative purposes only. It is not possible to invest directly in an index. Assumes reinvestment of dividends and capital gains and that an investor stayed fully invested over the full period.
As always, if you have any questions or wish to discuss whether any of the mentioned investments are suitable for you, please do not hesitate to call us at 604-658-3056 or email.
Best Regards,
Ron Aloni / Alan Goh / Jason Chen
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