Investing: Never a Smooth RoadChristopher Briggs, RRC®, Wealth Advisor, Managing Director
Fear and greed—the two emotions that are said to drive the equity markets. How quickly, it seems, that the sentiment can oscillate from one extreme to the other. Over recent times, Canadian and U.S. equity markets have experienced periods of remarkable advances in prices, as well as many months which seemed to forecast an Armageddon just around the corner.
It is interesting how quickly the focus of many market commentators can shift with these movements. After a volatile December for both Canadian and U.S. markets, the media was consumed with recessionary talk. Yet this was quickly muted after significant January and February gains. In the U.S., the Federal Reserve took a less aggressive stance in its monetary policy, downplaying its position on the prospect of further interest rate rises. This, combined with a solid U.S. earnings season, and delayed U.S./China trade tariff deadlines, provided much relief to investors.
Here at home, the picture is less clear. Growth has slowed and the struggle continues for certain segments of the housing market, as well as the oil and gas sector. Corporate earnings results have been mixed, but the labour market is still solid, and cash levels on many corporate balance sheets remain healthy.
While certain voices of the media continue their pessimistic narrative, many investors are wondering where the markets are headed.
This is a good reminder that volatility plays a common role in the equity markets.
With the ups and downs, it may be easy to fall into the trap of taking an unbalanced view – looking only to the recent past to guide investment decisions. But this is often counterproductive. When times are difficult, it constrains positive action. How many times have we heard the phrase: “it’s not a good time to buy now because…?” Or, when the market progresses, there may be cause for anxiety: “how high can it go?”
We should remember that investing in the equity markets is never a smooth road.
Our challenge as investors is to ignore the noise, be it good or bad. For many of us, this involves a longer-term commitment to, and confidence in the financial plan that has been constructed to achieve your goals.
The road ahead is a long one filled with many ups and downs. Be guided accordingly. Don’t let the inevitable bumps along the way keep you from your drive to the future. Focus on your own goals, keep emotions under control, and keep your assets working hard for you.