Make Sunshine While the Hay is Out
Have you ever been in a situation where you overhear a conversation that seems to be tailor made for your consumption?
Recently, while in the airport security line up, the person behind me was having the most interesting phone call with a friend. I was able to catch most of their chat, due to his volume and the length of the line up (pro travel tip = take extra time to get through security at the airports right now!) From the notes I quickly jotted down after making it through security, the one side of the conversation that I could hear went something like this…
I was at O-bar and met a guy named Mo through a friend of mine. Mo started telling me how he had made a lot of money on Crypto and offered to help me try to get a wallet set up to get involved. He couldn’t really tell me what it was or what problem it was going to solve but it was a way better way to invest than stocks or real estate. I met up with him after that and told him that I was thinking of buying some land. He showed me on his laptop how he had started with 10 million which was now worth 30 million a few months later and said, can land do that? I set up a wallet just to give it a try and when I put a bunch of money in there is disappeared almost immediately. I asked why that would be and Mo said it goes up and down quite a bit. I asked him what kind of interest it paid, and he didn’t really have an answer for me. I’ve tried a number of different ways to invest in it since then and I haven’t had much success. I think you need to sit right next to these guys to trade when they trade in order to make the money. I don’t really trust it as it seems to be on the edge of legitimacy. Another guy I met that did this has a huge house and tons of cars, but I think they are all leased. Apparently, the cops went by his house on Friday and busted him for something. I think it’s a worthwhile investment and I’m going to invest more; you just have to get close to these guys…..I guess you have to make sunshine while the hay is out.
Not joking, this was verbatim the last thing I heard before we headed in different directions.
As we have mentioned in many of our previous communications, speculation and investing are not the same thing; Just like jumping into a pool and cliff jumping are not the same thing. I mention this as it gives us comfort when we are going through a difficult period in the markets. Many of the of the sensational headlines that we are seeing today do not apply to how we manage your hard-earned money. Investing in companies that have strong cash flows and enduring business models that will likely be around for decades is boring but has traditionally been rewarding over the long term and should help you to sleep at night.
Brief Market Commentary
The end of the 3rd quarter (Sept 30th) left us with very difficult year to date performance numbers. Diversification across asset classes, geography and sectors didn’t help a decline in market values. October and November have painted a significantly different picture with strength across most major markets. The likelihood of a recession in 2023 is climbing but how much of this has already been priced in? Will it be a deep or shallow recession? When will government policy makers stop tightening? All things we are watching, but in the meantime, we should recognize a few positive factors that may be influencing markets.
- US midterm election results were favorable from a historical market perspective
- Seasonality is on our side
- The estimated terminal interest rate has declined recently
- The earnings picture for most North American companies remains positive
The only people who get hurt on a roller coaster are the jumpers. We do need to navigate uncertain waters ahead, but we have been here before, we will come out the other end, and we look forward to making sunshine while the hay is out.
What to do with a variable rate mortgage?
Variable Rate mortgages account for about one-third of all outstanding mortgages in Canada, up from about 20% in 2019.
If you currently have a variable-rate mortgage with fixed monthly payments, you’ve no doubt seen the portion of your payments going towards the interest cost surge. Rather than wait until you reach the point where none of your payment is reducing your principal balance, you should pre-emptively contact your lender to clarify your options.
If you have the ability, increasing your payment amount immediately will keep you ahead of the game and ensure a larger amount is going towards reducing your principal. This also applies to borrowers who may have reached their trigger rate and have already had to increase payments, since we’re expecting at least another rate hike or two from the Bank of Canada in the coming months. Some lenders will allow you to extend your amortization or even have negative principal payments, but that may result in a significant payment increase at renewal time.
We have some fantastic partners within the mortgage industry (upon referral) so please let us know if you would like to leverage their expertise.
Nice to be Recognized: Best of Province Wealth Advisor
For those of you who know me, you are probably aware that patting myself on the back is at the bottom of my to do list. That said, being recognized in the “Best of Province Wealth Advisor” ranking by The Globe and Mail’s Report on Business, in Conjunction with SHOOK research is very rewarding and humbling. To think that this is an individual accomplishment in my case would be an error and it would be foolish for me not to take this opportunity to thank the team that does all of the heavy lifting. The dedication, wisdom and patience of my direct teammates Colin, Janine, and Suzanne over the last two decades has been incredible. I would challenge you to find individuals that care more about helping people make smart financial choices. I am also blessed to have the support of the rest of the members of the Granville West Group, a top-notch network of industry professionals and a client base full of the best humans on the planet. Thank you! 