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.

No posts found.

More Like This...

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

That Giving Feeling

Topic:
Foundations & Endowments, Tax Planning
Excerpt:
Summer is now a distant memory. In fact, a radio announcer declared only 77 days until Christmas. Ugh. It is usually in the last quarter of the year

More Like This...

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

COVID: An Uneven – and Unequal – Recovery

Topic:
Human Interest
Excerpt:
Canadians have had enough of the lockdown. Here we are 18 months after you first heard of the then mysterious Wuhan flu. Today, but for any curve ball

More Like This...

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

Nexus: Behind the Scenes

Topic:
Inside Nexus
Excerpt:
Over the years, readers of the Nexus blog have been treated to various posts from my colleagues. On the other hand, much like my role at Nexus, I have

More Like This...

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

The Burden of Experience in a Modern World

Topic:
Investments
Excerpt:
Those of us who started in the industry decades ago have witnessed enormous change. When I finished university in 1982, Japan was the world’s

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.

The Great Transition – A Tax Efficient Withdrawal Strategy

Topic:
Tax Planning
Excerpt:
The change from “saver” to “spender” is what I call the great retirement transition. Figuring out how to draw on your retirement savings to meet your

More Like This...

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

Living to 100… Is 100 the New 80?

Topic:
Wealth Planning
Excerpt:
It’s a common saying that there are two certainties in life, death and taxes. While we have a pretty good idea when we get taxed, which feels like all

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.

No posts found.

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.

From The Editor: Summer Vacation

Topic:
Inside Nexus
Excerpt:
Summertime and vacations go hand in hand. The season is linked with feelings of relaxation and recreation. As kids, we saw the arrival of summer as

On a Side Note…

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

Nexus and the ESG Integration Approach

Topic:
Investments
Excerpt:
At Nexus, we think Environmental, Social and Corporate Governance (ESG) considerations are a helpful input to our investment decision-making process.

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.

The Great Transition – A Tax Efficient Withdrawal Strategy

Topic:
Tax Planning
Excerpt:
The change from “saver” to “spender” is what I call the great retirement transition. Figuring out how to draw on your retirement savings to meet your

On a Side Note…

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

Living to 100… Is 100 the New 80?

Topic:
Wealth Planning
Excerpt:
It’s a common saying that there are two certainties in life, death and taxes. While we have a pretty good idea when we get taxed, which feels like all