And This, Too, Shall Pass

This too shall pass; typed on white paper on vintage typewriter

Topic: Investments

January 29, 2019

Image used with permission: iStock/EttaDallas


Print & Share

Print

And This, Too, Shall Pass

Last year’s performance statement was likely not as good as what you’ve been used to. The news might not get any better in the New Year as businesses steer through an uncertain political and macroeconomic landscape and take a more cautious approach. A case in point is Apple, as CEO

Tim Cook in a letter to investors warned of this reality check early in January, revising the company’s revenue guidance downward for the first fiscal quarter of 2019.

And it is a reality check. Investors have enjoyed a nine-year bull run — the longest in modern history. But just as that run is winding down, it’s also important to remember the market is doing what it always does. It goes up and then it goes down. Repeat. In times of volatility, as we experienced at the end of December and the beginning of 2019, it’s crucial to appreciate the big picture, and stick to, a financial plan.

For context, the last quarter was rough. But, once you look past headline-grabbing noise around politics, trade wars, rising interest rates and tech selloffs, the fundamentals are strong — as Neil Irwin has penned in The New York Times article What should you do about a falling stock market? Nothing. Slower growth is still growth. So, if you’re feeling anxious and want to act, don’t. Set your emotions and any thoughts of exiting and trying to time the markets aside. History shows, it is almost impossible to get back into the markets at just the right time. The most likely outcome for investors so inclined is missing out on the rebound when it happens. And it always does.

Remember the global financial collapse in 2008 and 2009? From peak-to-trough, shares of many blue chip companies were down more than 50%. Every sector of the market plunged. There was nowhere to hide. Now consider this: if you were a Nexus Equity Fund investor in June of 2008, and simply stayed fully invested by buckling up through the financial collapse, you would have now made a 138% return on your investment.(1)

When markets are rough everyone onboard feels the turbulence. However, those with a clear understanding of their investment objectives are able to more easily tune out the commotion and focus on the long-term fundamentals.

At Nexus we work with each client to determine the right mix of fixed income and equities for their portfolio, based on their specific requirements and investment objectives. We define risk as not being able to meet your goals, and regard asset mix as the key driver of long-term investment results. By making sure that your portfolio asset mix is aligned with your objectives, our goal is to create a road map that will help you navigate market fluctuations in order to achieve your desired results over time. This map is dynamic. It is reviewed regularly to reflect what’s happening in your life, as well as capital market expectations, and always with an understanding of your financial capacity and willingness to handle market volatility. This helps ensure decisions are strategic and not a reaction to short-term market dips and turns and that the focus remains on meeting your goals.

We follow the same principles when making investment decisions. To dampen the distracting ups and downs in volatile times, we focus on diversification and high-quality holdings in our security selection process. Our approach is time-tested. Looking in the rear view mirror, the blow of the financial crisis was significantly softened for Nexus clients.

Finally, to put into perspective the tumultuous markets of late, an adage tracing back to an ancient Persian monarch who challenged the wisest in his court to conceive a sentence that would hold true in all situations: And this, too, shall pass.

(1) Nexus return is the compounded total return shown prior to the deduction of management fees, but after deduction of all other expenses. Past performance is not indicative of future results. Return is calculated from June 30, 2008 to January 15, 2019.

More Like This...

See another CRM2 blog post that may be of interest to you.

CRM2: The Nexus Approach to our CRM2 Reports

Topic:
CRM2
Excerpt:
With changing securities regulations coming into effect, investment firms are now required to provide individual investors with specific additional in

More Like This...

See another Foundations & Endowments blog post that may be of interest to you.

Charitable Giving Made Easier

Topic:
Foundations & Endowments
Excerpt:
Giving to charities and supporting our community are important to us at Nexus. We donate a portion of our management fees back to the charities and

More Like This...

See another Human Interest blog post that may be of interest to you.

The Case for Openness – An Open and Shut Case?

Topic:
Human Interest
Excerpt:
From time immemorial, mankind has been open. Open to new ideas, open to trade, and open to migration – the three critical ingredients for progress.

More Like This...

See another Inside Nexus blog post that may be of interest to you.

Embracing the Golden Years: A Journey of Reflection and Wisdom

Topic:
Human Interest, Inside Nexus
Excerpt:
It was an otherwise slow mid-afternoon trading session on the “old” floor of the Toronto Stock Exchange at 234 Bay St. The dog days of summer had

More Like This...

See another Investments blog post that may be of interest to you.

Say “No” to Absolute Safety

Topic:
Investments
Excerpt:
My colleague Harsh Narsinghani and I were recently discussing how many of our clients were unnerved by geopolitical and economic worries and how it

More Like This...

See another Pearls of Wisdom blog post that may be of interest to you.

“Work, Work, Work, Work, Work, Work”

Topic:
Pearls of Wisdom
Excerpt:
This has been a busy year. I’ve had lots happening on the home front (a wedding!) and lots going on at the office (too long to list!) Managing work

More Like This...

See another Tax Planning blog post that may be of interest to you.

Saving in my Professional Corporation – It’s a Great Idea!

Topic:
Tax Planning
Excerpt:
The ability for professionals in Canada to incorporate their practice has existed for some time. Doctors, dentists, lawyers, accountants, and other

More Like This...

See another Wealth Planning blog post that may be of interest to you.

Dentists Get Their Financial Check-Up: Nexus attends the 2022 Ontario Dental Conference

Topic:
Wealth Planning
Excerpt:
In early May, we had the opportunity to attend the Ontario Dental Association’s (ODA) Annual Spring Meeting (ASM) in Toronto. Now in its 157th year,

On a Side Note…

See another CRM2 Nexus Notes Quarterly article that may be of interest to you.

No posts found.

On a Side Note…

See another Foundations & Endowments Nexus Notes Quarterly article that may be of interest to you.

Charitable Giving Made Easier

Topic:
Foundations & Endowments
Excerpt:
Giving to charities and supporting our community are important to us at Nexus. We donate a portion of our management fees back to the charities and

On a Side Note…

See another Human Interest Nexus Notes Quarterly article that may be of interest to you.

Worth 1,000 Words

Topic:
Human Interest
Excerpt:
A little humour makes the world a better place.

On a Side Note…

See another Inside Nexus Nexus Notes Quarterly article that may be of interest to you.

Where Have All the Boutiques Gone?

Topic:
Inside Nexus
Excerpt:
Many small, once independently managed, firms have fallen into the clutches of larger organizations such as banks, institutional money managers and

On a Side Note…

See another Investments Nexus Notes Quarterly article that may be of interest to you.

Don’t Worry, Be Happy

Topic:
Investments
Excerpt:
A recent article by David Brooks in The Atlantic magazine argues that, despite the heavy shroud of pessimism that envelopes most of our current

On a Side Note…

See another Pearls of Wisdom Nexus Notes Quarterly article that may be of interest to you.

Pearls of Wisdom

Topic:
Pearls of Wisdom
Excerpt:
Reading is one of the principal occupations in our profession. As we digest a wide range of material, interesting ideas and surprising facts – some

On a Side Note…

See another Tax Planning Nexus Notes Quarterly article that may be of interest to you.

A Nexus Feature on: First Home Savings Accounts (FHSA)

Topic:
Tax Planning
Excerpt:
The FHSA is a registered plan to help Canadians save for their first home and could play a role in either your or your adult child’s overall wealth

On a Side Note…

See another Wealth Planning Nexus Notes Quarterly article that may be of interest to you.

From The Editor: Planning for Long-Term Care

Topic:
Wealth Planning, Living to 100
Excerpt:
As part of our Living to 100 series, Nexus hosted a client event in June featuring guest speaker Karen Henderson, an expert in long-term care planning