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Thoughts on the current market weakness

Although you are likely hearing about the current market volatility everywhere you look or listen, our team remains committed to controlling what we can control and investing with a long-term horizon while focusing on earning stable cash flow, being nimble when opportunities are available and reducing exposure, where possible, to market volatility. The media reports what the market is doing this minute and what they think the market will do next. It draws you into acting like a speculator rather than an investor.

As much as we love to see markets rally, our best opportunities are most often when markets correct. The current market decline presents investors with an opportunity to invest new capital on favourable terms and we are comfortable recommending this. We fully expect to see this volatility going forward, as we enter the Late-Bull phase of the market cycle. Owning a stock is like owning part of a business. Investors in our portfolios own a part of many businesses. Over time, the wealth these businesses create is returned to the owners in dividends and capital appreciation. Investment returns are determined by the performance of the businesses over the long run. Past results have been pleasing and we expect future results to be quite satisfactory.

Time will tell if markets will drop further and present even more attractive opportunities. If they do, you can be sure we will become more emphatic in our recommendation.

As mentioned in last month's newsletter, we suggest using volatility to our advantage in 2 ways:

  1. Should a correction cause you sleepless nights, then maybe your Risk Tolerance has changed and we need to make changes to your portfolio.
  2. If your long term investment goals remain the same, then this correction may be an opportunity to deploy available cash and buy more of your portfolio at lower prices.

 

 

 

The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson GMP Limited or its affiliates. Assumptions, opinions and estimates constitute the author's judgment as of the date of this material and are subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Past performance is not indicative of future results. The comments contained herein are general in nature and are not intended to be, nor should be construed to be, legal or tax advice to any particular individual. Accordingly, individuals should consult their own legal or tax advisors for advice with respect to the tax consequences to them, having regard to their own particular circumstances.. Richardson GMP Limited is a member of Canadian Investor Protection Fund. Richardson is a trade-mark of James Richardson & Sons, Limited. GMP is a registered trade-mark of GMP Securities L.P. Both used under license by Richardson GMP Limited