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Market Fluctuations

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Monday August 24, 2015 4:20 p.m.

Wow! That sums up the last couple of weeks on the markets.

People are just getting back into a fall/back-to-school routine after a pleasant summer weather-wise. We’ve had warm, sunny days, cooler nights for sleeping and enough rain for gardens but not too much to flood outdoor activities.

Now, the world’s stock markets are down, some as much as eight per cent (China) and the Toronto Stock Exchange (TSX) was down 750 points at one point closing down 420.93. The Dow is down 1100, I could keep going but you’ve likely heard the numbers.

Why now? Many investors have been ignoring what’s going on in the world and appreciating summer.

We saw some weakness in the markets last week and investors had time to reflect on economic indicators over the weekend and react. Let’s consider what we’ve heard over the last couple of months:

  • Greek debt crisis continues
    • Greek Prime Minister resigns
  • China has a slowing economy
    • China devalues currency to prop up manufacturing
  • Canada starts the longest federal election campaign
    • Senator Duffy on trial for “who really knows?”
    • Mudslinging by most political parties
  • Dropping world oil prices (below $39/barrel)
    • Over supply of world crude
    • Iran starting to ramp up and supply another one million barrels per day
    • No corresponding drop in Ontario gasoline prices
  • Republican and democratic politics mounting ahead of U.S. federal election in November 2016
    • I guess if they’ve elected an actor (Ronald Reagan) and a peanut farmer (Jimmy Carter), it is not a far stretch to see a reality TV host given the codes to the largest nuclear arsenal in the world
  • Ontario government looking at adding pension plan and taking another 1.9 per cent out of workers income and 1.9 per cent of all payroll in the province.
  • The U.S. Federal Reserve trying to figure out when to raise interest rates
  • Talk that Canada has certain housing markets that are in a bubble
    • Probably some very serious implications for retirement savings
  • High youth unemployment not only in Canada but worldwide
  • Loss of high paying manufacturing jobs in Ontario

With all this, one could be forgiven for being a pessimist.

However, not all has been negative. Toronto pulled off a very successful Pan Am/Para Pan Am Games, one of the largest sports events in Ontario’s history. Congratulations to our athletes and those who organized the games.

We went through five years of preparation and construction. Some good days and probably at the same time it seemed it would never come together. In the end, we accomplished sporting successes, new infrastructure and a boost to international tourism.

Markets can be viewed the same way. It is easy to list the negatives and have trouble recalling the positives. Remember, just like the games, have a plan and stick to it and the desired results will come to those who are patient.

If you have a specific question regarding your portfolio or want to confirm your asset allocation is still current, you can contact us for an answer or a review.