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Cacic Wealth Management

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Address 500 Centre Street SE 27th Floor Calgary AB, T2G 1A6
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Milan Cacic

June 17, 2022

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COCKTAILS ANYONE?

At the time of writing, the S&P 500 is down 23.1% and the NASDAQ Composite Index is down 31.9% year-to-date. On Wednesday, The Federal Reserve attacked inflation with a 0.75% interest rate increase. This was the largest interest rate hike since 1994. The Federal Reserve may also increase interest rates more aggressively in the future to continue to combat inflation. Combined with the fact that growth is slowing across many major economies, there are fears this may spark a global recession.

 

I came across a chart yesterday that I thought was quite interesting. The chart below shows the performance of the S&P 500 each calendar year since 1981. The solid bar chart lines are the calendar returns of the S&P 500: black represents positive and red represents negative. The light-coloured grey dot is the maximum intra-year decline that the S&P 500 experienced in that given year. As the chart illustrates, there were many years where there were declines well in excess of 10%, yet the S&P 500’s total return for that year was still positive.

 

 

There is a lot of data that I could show you but sometimes it just becomes overwhelming. During times like this, we like to keep it in perspective. While we know this volatility will likely continue a little bit longer, history tells us that these periods do not last forever and financial markets tend to recover over time. We also know from history that during times like this, it is best to put our emotions aside so that we can make sound, long-term investment decisions.

 

I have also included a piece from our CIBC Economics team entitled "Long run inflation: Can we do two?".

 

As always if you have any questions, please feel free to give us a call.

 

I hope everyone has a great weekend and happy Father's Day.

 

Milan

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CIBC Private Wealth” consists of services provided by CIBC and certain of its subsidiaries through CIBC Private Banking; CIBC Private Investment Counsel, a division of CIBC Asset Management Inc. (“CAM”); CIBC Trust Corporation; and CIBC Wood Gundy, a division of CIBC World Markets Inc. (“WMI”). CIBC Private Banking provides solutions from CIBC Investor Services Inc. (“ISI”), CAM and credit products. CIBC Private Wealth services are available to qualified individuals. Insurance services are only available through CIBC Wood Gundy Financial Services Inc. In Quebec, insurance services are only available through CIBC Wood Gundy Financial Services (Quebec) Inc.


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