Since my mid-March article, we remain in a period of uncertainty and stress. We’ve all been through political, economic and market turbulence before, but this time feels different. Unlike other stressful times, the catalyst did not come from a far-off region of the world or from a complex financial structure bursting.
The world is clearly changing with walls, and reciprocal walls, building up. Walls from China are one thing but threats from our closest neighbor feel personal – with the ensuing chaos self-inflicted. America’s trend towards deglobalizing and reshoring to North American’s integrated economy was already well in effect for many years. These new tariffs, or threats of tariffs, (it is tough to tell sometimes) bring disorder to this trend.
Still, despite the noise, I believe that this uncertainty is not enough to hold back the long-term innovation and financial performance of the great companies of the world. We often forget that we don’t own the stock market – we own companies. We own the best, most adaptable companies – and meeting this challenging environment head on is what they do.
Yes, the world is changing. It brings threats and opportunities – and we all know the threats. Canada is emblematic of this reality. I want to underline two opportunities that have opened up in Canada in two short months. First, we see provincial leaders productively working to dismantle interprovincial trade barriers. Wouldn’t it be fantastic to see provinces unlock the potential of trading more east and west than north and south. Second, we see an openness to diversify our energy export markets. Could you ever have imagined that the majority of Quebecers now favour a pipeline on their territory. We need to pull our shoulders back and get to it.
I remarked in my last newsletter that the news is changing day-to-day. That was definitely an understatement. Every hour there is another story. This disturbing news cycle offers investors, once again, the alluring invitation to exit their investment plan for the offramp of relief: cash. We all have this bird chirping in our ear. “Move to the sidelines. Wait for the storm to pass. We’ll get back in when things settle down”. This is what we constantly refer to as the Big Mistake. We need to dial down our newsfeeds, slow down and control what we can control.
History tells us that stability will return. We just don’t know when.
This may sound trite as an analogy but whenever I am in the depths of a flu bug it can feel like a market decline. I feel terrible. I feel like it is never going to pass. And despite the reality that I’ve emerged from a similar illness dozens and dozens of times, I sometimes make promises to make it all go away. What would I trade for some respite?
A soldier once said: “Psychology is more infectious than the flu.” So, the prescription for us all: don’t catch the latest news feed pathogen.
As investors we must not overreact to changes in the environment. During times of uncertainty, focusing on fundamentals and principals of long-term investing is key to success. Above all, we need to be patient.
If you have any questions feel free to reach out.
Bryan Deviney is a Senior Financial Advisor with Assante Capital Management Ltd. The opinions expressed are those of the author and not necessarily those of Assante Capital Management Ltd. Please contact him at 416.216.6500 or visit www.bryandeviney.com to discuss your particular circumstances prior to acting on the information above. Assante Capital Management Ltd. is a Member of the Canadian Investor Protection Fund and the Canadian Investment Regulatory Organization.
