We are frequently asked about our thoughts on current events during calls and meetings with clients. The prudent answer is based on an overview of the current financial and economic environment and, more importantly, how the "event" relates to a family’s personal financial situation and the fact that a sensible investor can hold two seemingly conflicting thoughts in their head regarding long-term optimism and short-term awareness of risk.

Short-term, sensible investors are aware of the current risks in life and they manage them by minimizing their debts and keeping proper cash levels to stay resilient. They understand that unexpected surprises can and do happen, so they do not live at their financial limit, instead maintaining excess “margin” in their financial life. They also take advantage of periods of uncertainty by adding to their long-term wealth plan as opposed to withdrawing from it, and they do not delay adding to their long-term portfolios “until things sort themselves out”.

Long-term, sensible investors are optimists, knowing that things work out just as the past has proven over and over again. Historically, when it comes to financial crises, we have the advantage of knowing how the story ended and that, unsurprisingly, things worked out - the farther back we go we see this is the case - not sometimes, but always. Despite a series of financial crises since the mid-80s including the savings and loan crisis from 1986 to 1995, the Long-Term Capital Management bailout in 1998, the dot-com bubble between 1998 and 2000, the terrorist attacks on the World Trade Center in 2001, the Global Financial Crisis in 2008, and the COVID-19 pandemic between 2020 and 2022, financial markets and the world have not collapsed as many prognosticators would have had you believe during each of these downturns.

So what changes, if any, should an investor make to a considered wealth plan in light of the conundrum of rising interest rates and inflation (is it rising or falling?), and all the resulting complications? We invite you to view our video below, The cornerstone to financial success: Investor behaviour:

 

 

We welcome your questions.

Randy and Ian