This time is different
In reflecting back on the market downturn in December 2018, we can see that this last correction was no different. In fact, investors should expect a correction (a market downturn of greater than 10% but less than 20%) approximately every other year. There have been six corrections since 2009 alone. By their actions, we believe investors perhaps feared a bear market in the fourth quarter of 2018. The difference between a correction and bear market however, is that a bear market typically coincides with a recession. Again, our work suggested that a recession was unlikely within the following 12 months.
With recent trade rhetoric volatility, we ask ourselves whether these are negotiation tactics that will be short term in nature or does this have the potential to impact global economic activity and earnings over the long term. As with any geopolitical event, it is impossible to quantify. However, as witnessed with the NAFTA negotiations, trade war rhetoric will lead to volatility and is likely to subside as cooler heads prevail. Market returns will likely be driven by fundamentals and interest rate policy. Fundamentals continue to be decent which will likely result in interest rate policy that will be favorable for both stocks and bonds. In this environment, both asset classes are likely to be positive over the coming 12 months but are unlikely to experience the above-average returns we’ve seen in the first quarter of the year. That said, logic does not always prevail in the market which is emotional and behaves much like a teenager most of the time.
Interesting Discovery in Real Estate
A great friend of our team, Peter Andersen has recently brought a unique idea to Canada that has been extremely successful overseas. A common theme that we hear when people are looking to purchase recreational property is that they are hesitant to be tied to one location. If you want to see how to fix this challenge in a big way, check out 21-5.
If you would like to explore this further, please let us know.
Is there life beyond meat?
Have you tried the beyond meat products? If not, I encourage you to see what all the talk is about. From an investment perspective, the changing landscape on how we are eating may provide some interesting opportunities for the future.
Watch the video here