Market Commentary

Making Cents of the Markets

As September is World Alzheimer’s Month, we are re-sharing one of our most memorable episodes of Ready.Set.Retire! from last year.

Lori & Jon were joined by a special guest, Jen Lyle, CEO of the Alzheimer Society of BC. They discussed the importance of creating a more dementia-friendly world where those affected are acknowledged, supported, and included.

Listen here or subscribe on Spotify, Apple podcasts, and Acast.

Listen now to the most recent Making Cents of the Markets on CKNW, where we discussed the markets as we anticipated the Fed’s interest rate decision in the US.

We also talked about how to manage your debt in this rate-increasing environment. Should you hold onto your investments or sell to pay down your mortgage now?

Click to listen here.

Beyond the Markets

Pumpkins After Dark

Canada’s award-winning largest outdoor Halloween event kicked off yesterday. This fall, witness over 6000+ hand-carved pumpkins come to life during this nighttime walkthrough experience.

This family-friendly event features live pumpkin carving demonstrations, fall treats, and plenty of photo opportunities.

Click here to purchase tickets & find out more!

Be in the Know

“The best way to pay for a lovely moment is to enjoy it.” – Richard Bach

Lions and tigers are fine. It’s bears that are scary.

Inflation, the Fed’s rate hikes to fight inflation, continued supply disruptions, and fear emanating from Putin’s losing war took stocks and bonds lower this week.

But we’d like to step back to put this across-the-board market sell-off into some context. The S&P 500 is re-testing its lows hit in mid-June. The year 2022 now joins with 1962, 1974, 2001, 2002, and 2008 as the only years since 1950 to be down 20% or more by September. The year isn’t done yet, but only in 2008 did the market not improve by year’s end.

Every example encompassed a unique set of circumstances, but some are pointing to the year 1962 as the closes analog to today. It was also a midterm election year but afflicted by the Russian-backed Cuban Missile Crisis (instead of Ukraine). It was a crisis that could have resulted in the destruction of New York City (had the Russians listened to Fidel Castro and Che Guevara) but was averted by the cooler heads Kennedy and Khrushchev. Some of our readers will recall just how scary the prospect of Armageddon was that year.

 

Our Strategy

It has been another volatile week in markets –“thanks” to Fed Chair Jerome Powell. The Fed increased its benchmark rate by another .75%, no surprise there! However, it was their comments that took markets lower again. They continue to fight inflation, almost at any cost to the economy, and this creates a lot of uncertainty for markets. How high will rates go? For how long? Will it tip the economy into a mild or deep recession?

Once investors are convinced that peak inflation has been reached and we see less hawkishness from the Fed, we believe we will see a strong rally in markets. The million-dollar question is when will this happen?

In our opinion, we feel it will be sooner than you think. Mid-term elections are around the corner, which can also create more volatility in September/October. However, usually, markets move higher after mid-terms regardless of the outcome. So, looking forward, if we see lower core CPI as well as mid-term elections coming to a close, this could lead the way to a strong rebound late in the year. Again, we always watch the data closely, and as active managers, we will make quick changes as necessary.

We currently have 20% to 30% cash in the Legacy portfolios so that we can reduce the impact of the decline. Again, we were down half of what the market was this week due to our disciplined strategy. We sold some positions that went through our stops, but more importantly, were showing signs of breaking down and could move even lower. Just as important as it is to have cash on the sidelines, we must also allow stocks to move around during the volatility and not panic and sell everything. We continue to hold high-quality companies in sectors that we feel will rebound when markets do.

After 20 years of managing portfolios, we know that markets can change very quickly, and we have to be ready for the reversal in trend when you least expect it as well. If you only hold cash, you often are left in the dust and it can be difficult to make up any losses. The stock market is volatile because there is a lot of uncertainty right now, however, we feel this will improve over the coming months. Investing is for the longer term and there will be opportunities that present themselves throughout this period as well. Keep calm and carry on.

Visual of the Week

 

 

The comments and opinions expressed in this newsletter are solely the work of Pinkowski Wealth Management, not an official publication of Canaccord Genuity Corp., and may differ from the opinion of Canaccord Genuity Corp’s. Research Department. Accordingly, they should not be considered as representative of Canaccord Genuity Corp’s. beliefs, opinions or recommendations. All information is given as of the date appearing in this newsletter, is for general information only, does not constitute legal or tax advice, and the author Pinkowski Wealth Management does not assume any obligation to update it or to advise on further developments related. Investing in equities is not guaranteed, values change frequently, and past performance is not necessarily an indicator of future performance. Investors cannot invest directly in an index. Index returns do not reflect any fees, expenses, or sales charges. All information included herein has been compiled from sources believed to be reliable, but its accuracy and completeness is not guaranteed, nor in providing it do the author or Canaccord Genuity Corp. assume any liability.

CANACCORD GENUITY WEALTH MANAGEMENT IS A DIVISION OF CANACCORD GENUITY CORP., MEMBER-CANADIAN INVESTOR PROTECTION FUND AND THE INVESTMENT INDUSTRY REGULATORY ORGANIZATION OF CANADA