From the Editor: Don’t Jump Without a Parachute

Q3 | November 2018

Laptop, notebook, Tablet and coffee on work desk

Topic: Investments

Dianne C. White, CPA, CA, CFP, TEP

November 7, 2018

Image used with permission: iStock/PRImageFactory


Print & Share

Print

From the Editor: Don’t Jump Without a Parachute

Q3 | November 2018

The month of October seems to have a bad reputation for being scary and this has nothing to do with Halloween. The crash of 1929 was an October event and many investors still remember 1987 and even 2008. According to data assembled by Bespoke Investment Group, when we look at the last one hundred years of the worst performing months, October is much less frightening than its reputation. So what causes this irrational fear about October?

Don’t underestimate the power of anecdotal evidence or even a full moon. But in all seriousness, October earns its reputation because it has provided some of the most challenging months in history. However, the reality is that most often performance in the 10th month of the year is not that different from the other 11 months.

Looking back at October, it was the worst month we have experienced in a while. After a long hiatus, volatility has returned to the markets. Instead of blaming the month of October, it is important to accept volatility as the price of admission when you are an investor. Investors can temper the volatility associated with equities by ensuring they don’t jump without a parachute.

Bonds act as a buffer in a portfolio, smoothing out the inevitable peaks and valleys in portfolio performance. They provide “ballast in the boat”. However, bonds have had a rough time of late. Interest rates and inflation have been low for many years now. This means that bonds have provided relatively poor returns in the eyes of those searching for more lucrative yields. To make matters worse, interest rates have started to go up which means negative returns for bonds. Despite uninspiring returns, bonds are an important component of Canadian investors’ portfolios. In July, John Stevenson penned an article entitled The Fixed Income Conundrum and explained why bonds still provide a safety net for investors. In this issue of Nexus Notes, Alana Buckley examines, in more detail, the impact of rising interest rates on bond returns. She also explains how the Nexus Income Fund is positioned for this period.

Also in this issue, Alex Jemetz highlights the many reasons why private clients should prefer a boutique firm like Nexus over a big financial institution. Bigger is not always better. There is external evidence that private clients receive a superior experience at a smaller investment firm, stemming from factors such as performance, accessibility, safety, simplicity and conviction, when combined with tax and personal financial planning expertise.

Finally, just a reminder to clients that we will be hosting our annual client events over two evenings and a lunch session in November. Don’t forget to RSVP to Jorjan at . We look forward to seeing you there!

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.

Don’t Worry, Be Happy

Topic:
Human Interest
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

More Like This...

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

Here we Grow Again!

Topic:
Inside Nexus
Excerpt:
Recently, the Nexus team welcomed our seventh new face to join us since the start of the pandemic in 2020. As growth is an integral part of our

More Like This...

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

The Demise of FTX and Sam Bankman-Fried

Topic:
Investments
Excerpt:
At the beginning of November 2022, Sam Bankman-Fried was crypto-currency’s “White Knight”. The flip-flop and t-shirt-wearing 30-year-old was the found

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.

Living to 100

Topic:
Wealth Planning, Living to 100
Excerpt:
“You’re going to live to 100!” For some, this may sound like a fantastic, welcome prognosis. They imagine gazing at sunsets every evening at the

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.

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.

On a Side Note…

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

Here we Grow Again!

Topic:
Inside Nexus
Excerpt:
Recently, the Nexus team welcomed our seventh new face to join us since the start of the pandemic in 2020. As growth is an integral part of our

On a Side Note…

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

Lessons From the Art World and Beyond

Topic:
Investments
Excerpt:
“Exactitude is not truth.”

On a Side Note…

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

A Table for None, Please; Working From Home on the Rise

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.

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

On a Side Note…

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

From The Editor: What’s My Age Again?

Topic:
Wealth Planning, Living to 100
Excerpt:
How old are you? It’s a simple question, one we readily know the answer to, although some of us might not want to talk about it. And why do we know