VOLATILITY IS A FEE NOT A FINE

 "Don't do anything is the best advice for most people most of the time, but it's not intellectually stimulating enough for many people to take seriously. Most fields have a positive correlation between effort and results. Investing is one of the few where the correlation is negative, especially for amateurs. The higher your IQ is, the harder it is to accept this."  
—Morgan Housel

Normally I don’t like to begin these newsletters with... 
 

CONTEXT IS EVERYTHING

“The stock market is the only market where things go on sale and all customers run out of the store.”
—Cullen Roche

I have experienced numerous bear markets (loosely defined as when markets decline at least 20% or more from their highs) since starting in the financial advisory business back in 1985. Suffice it to say… this current one is not my first rodeo. From my observation, despite the “chicken little, the sky is falling”...​

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MONEY, HAPPINESS & HAGGIS

“I always wanted to be the kind of guy our dog thought I was every time he greeted me after I came home from work!” —Keith Thomson (1st time self-quoting 😊)

Last month we said goodbye to our dog, Haggis. 
For those of you who have gone through this kind of experience, I’m sure you would agree that the pain of loss from the death of a beloved pet is an intense emotional experience. At least for me, I reluctantly have to admit...​

COULD THAT BE IT?

“Journalism, by its nature, has to sell you news instead of truth. The ninth time in a row that any investing magazine headlined the real truth – “Own, don’t loan; patience and discipline; slow and steady wins the race; end of story!” – it would go out of business, because its audience would have gotten the message and wouldn’t need to read it anymore. To survive, a magazine has to keep blaring, “Six Hot Funds To Buy Now!” And of course, they’re always six different funds. This is helpful to the magazine, but not to the investor.” —Nick Murray

HOW YOU MAKE MONEY IN THE STOCK MARKET

“Over decade-long time horizons, your investment performance will mainly be derived from how you handle corrections, bear markets, and market crashes. During every single bear market there will be times when you wonder if the losses will ever stop. You will always wonder how much lower the market can go. The economic news will be terrible. Other investors around you will be depressed. Pessimism becomes pervasive.” —Ben Carlson

THE MOST DANGEROUS PERSON IN YOUR INVESTING WORLD

"How you behaved in March 2020 was probably more important than what you did in the previous 100 months combined.“ —Morgan Housel

I believe Morgan Housel’s “Covid crash” quotation thoughtfully distils approximately 80% of an investor’s long term success in the stock market. Fast forward to now, with the S&P 500 down over 20% from its earlier highs this year, and you have a present day experience of how you will succeed as an investor....

TIME FOR A LITTLE CONTEXT

"About once a decade people forget that bubbles
form and burst about once a decade.“ —Morgan Housel

It seems to me that the primary function of financial journalism is to scare us out of ever achieving our financial goals by focusing on the market’s daily volatility…

TIME TO FEED THE GOOSE

“Taxes are our way of feeding the goose that lays the golden eggs of freedom, democracy and enterprise. Someone says, 'Well, the goose eats too much!’. That’s probably true. But better a fat goose than no goose at all.” —Jim Rohn

Please find below two CI Private Wealth tax resources which may assist you in dealing with your 2021 and 2022 tax reporting…

REFLECTIONS ON THE LAST 24 MONTHS

“The ones who thrive long term are those who understand the real world is a never ending chain of absurdity, confusions, messy relationships, and imperfect people.” —Morgan Housel

The last 24 months saw the advent of the worst global public health crisis in a century —since the 1918 influenza pandemic. In response, the world locked down, putting its economy into a kind of medically induced coma…

IT ISN'T ALWAYS GOING TO BE THIS EASY

“If you’re not willing to react with equanimity to a market price decline of 50% two or three times a century you’re not fit to be a common shareholder and you deserve the mediocre results you’re going to get compared to the people who do have the temperament, who can be more philosophical about these market fluctuations.”

—Charlie Munger

I believe 2021 will go down as one of the greatest years in stock market history. Including dividends...

This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. This material is not intended to provide, and should not be construed as providing individual financial, investment, tax, legal or accounting advice. You should consult your professional advisor(s) prior to acting on the basis of the information herein. The views and opinions expressed herein are those of the author and do not necessarily represent the views or opinions of CI Private Wealth and its affiliated companies. CI Private Wealth is a division of CI Private Counsel LP.

Keith

Thomson

    CIM®, MFA-P™

15 York Street, Second Floor,
Toronto, ON M5J 0A3

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Phone: (416) 681-7152
Email: kthomson@cipw.com