Holding Steady in Rough Seas

Sunlit Surf

Topic: Inside Nexus

James E. Houston, CIM, FCSI

December 28, 2018

Image used with permission: iStock/shaunl


Print & Share

Print

Holding Steady in Rough Seas

As 2018 draws to a close, and at the time of this writing, it would appear that the S&P 500 U.S. stock market index is unlikely to close above the level of its previous year-end close (2,674).

If that proves to be the case, it will only be the third time since the financial crisis of 2008/09 that the S&P has not had a positive calendar year return. In 2011, the S&P was virtually flat (down 0.04 points), and in 2015 it declined by less than one percent. Including dividends, the S&P has had a solid nine year run of total return gains. It’s been easy to get used to. Of those nine years, 2017 was perhaps the most idyllic. During that year, the index did not experience one correction of more than 5%, the CBOE Volatility Index hit a low not seen in 24 years, and the total return of the S&P was 21.8%. That’s a tough act to follow.

With investing, as with so many other things, recent experience has a material impact on people’s expectations. Considering that the S&P peaked in late September 2018 and has fallen considerably since then, it is not surprising that investors are now expecting that these declines will continue. The market weakness experienced in the fourth quarter can test the resolve of investors. It can also serve as a reminder of why it’s important to have a strategic asset mix. While we don’t know whether the market will continue to decline over the short term, we do know that, in the past, equities have been the primary source of tax efficient real growth in clients’ portfolios, and that resolutely sticking to one’s strategic asset mix has proven to be the right strategy. We, at Nexus, have each experienced multiple market cycles and recognize how disheartening down markets can be. We have also seen how a well-prepared financial plan, an appropriate asset mix and personal support can give our clients the confidence to endure times like these.

For those who find it difficult to weather volatile markets, Warren Buffet offered up some excerpted Rudyard Kipling in his 2017 Berkshire Hathaway Shareholder’s Letter:

“If you can keep your head when all about you are losing theirs…
If you can wait and not be tired of waiting…
If you can think – and not make thoughts your aim…
If you can trust yourself when all men doubt you…
Yours is the Earth and everything that’s in it.”

And while we are with ancient poets, this is the time of year for remembrance and “Rabbie” Burns’s Auld Lang Syne.

“Should old acquaintance be forgot,
And never brought to mind?
Should old acquaintance be forgot
And Auld Lang Syne?”

At Nexus, we are not just turning over a New Year, we are turning the calendar on our 30th year. Far from our acquaintances being forgotten and never brought to mind, we want to thank all of our clients and friends for thirty years of support and friendship.

May you all have a Happy and Healthy New Year!

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.

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.

Lessons From the Art World and Beyond

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

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.

The End of an Era – Inflation is Back!

Topic:
Investments
Excerpt:
Inflation talk is dominating the news. It is on the mind of the man in the street and investors alike – and not just in North America or the lands of

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