Embed Size (px)
Citation preview
THE JOHNSON LEGACY REPORT
Paul Johnson Financial Advisor
250-979-2748 [email protected]
Raymond James Ltd. 500 – 1726 Dolphin Avenue
Kelowna, BC V1Y 9R9
www.johnsonlegacy.ca
Lori Samuels Financial Advisor
250-979-2712 [email protected]
Jay Dowhaniuk Financial Advisor
250-979-2720 [email protected]
Building Trust for Generations
DECEMBER | 2013
IT WAS A VERY GOOD YEARFrank Sinatra, 1966
1966 was apparently a very good year for Frank Sinatra, reflecting on a life well-lived. 2013 has – so far – been a pretty good year for Canadian investors, too; especially considering some of the factors that have made economic life difficult. As we approach the end of one year and look toward the beginning of another, a look back to see what has been working can sometimes provide clues as to opportunities for future profits.
In spite of US Congressional partisan gridlock that temporarily shut down their government; the Canadian Senate scandal; wrangling over oil and gas pipelines on both sides of the border; tighter Canadian mortgage lending rules and discouragingly high North American unemployment rates, some investors have been doing pretty well.
That is, they did if they avoided putting money into savings accounts, GICs or bonds. Interest rates are so low that there hasn’t been much in the way of returns for several years, especially after allowing for inflation and taxes.
Mortgage lending rules were tightened at the behest of the Canadian Finance Minister, Jim Flaherty. The idea was to dampen down the real estate market in places like Vancouver and Toronto. That may or may not have slowed activity there, but it has had a profoundly negative effect in most of the country. The Law of Unintended Consequences strikes again…
So, if two of Canada’s most popular investments have provided little or nothing in the way of returns so far this year, who are these investors who have earned good returns?
Surprise! It’s the ones who invested in the stock market. That’s because the central bankers of the world, led by Ben Bernanke of the US Federal Reserve, have created a veritable ocean of liquidity that is presently “floating” the world economy. “Printing” vast quantities of money to replace the money lost during the 2008 / 2009 Financial Crisis prevented a deflationary depression like the one in the 1930s from developing. Now there are a very few, faint, tentative signs that this ocean of liquidity is beginning to seep into the economy, increasing the earnings of companies and encouraging business expansion. If this trend continues and intensifies, companies will take on more employees in order to keep their businesses growing. If that should develop, a self-sustaining business cycle should evolve, that could last ten years or more, resulting in vastly increased prosperity for most Canadians. Stay tuned.
It took us at Johnson Legacy a couple of years after the turn of the century to conclude that the “buy-hold and forget about it” investment strategy that had generated good returns during the 1980s and 1990s wasn’t working as well anymore. We had been on the leading edge of working with institutional quality, third-party portfolio managers since the early 1990s, on a limited basis. Before then, direct access to this calibre of manager was not generally available to the public. However, with the help of technology, a handful of firms and a few advisors started offering direct access to these portfolio managers through the mechanism of separately managed WRAP programs.
Over the next few years, with the benefit of experience gained through several market and economic cycles, we concluded that hiring the very best portfolio managers to manage our clients’ portfolios, was – and still is – the most efficient and least costly way for our clients to manage their investments. Portfolio performance has been respectable and positive, even through some of the most difficult market and economic cycles in history. We plan to continue engaging managers we and our independent consultant, Rogerscasey, judge best able to deliver superior returns, monitoring them closely and continuously to ensure they meet our expectations, replacing them when appropriate.
As for how to invest going forward into the year that lies ahead, remember this: if you keep doing what you’ve been doing, you’ll keep getting what you’ve been getting. If what you’ve been doing has been working for you, our advice is to keep doing it.
Reminders:
Tax Loss Selling: The deadline for tax loss selling in Canada is December 24, 2013 and the deadline for tax loss selling any U.S. holdings is December 26, 2013.
Tax Free Savings Accounts (TFSAs): If you have funds sitting in your bank account, please remember to contribute $5,500 to your Raymond James TFSA starting on January 1, 2014. The earlier you contribute the funds, the sooner they are sheltered from any tax.
Holiday Hours: Please note that our office will be closed December 25th, December 26th and January 1st.
Market Pulse:
Major Stock Indexes Level/Price YTD Return Ending Nov 29/13
S&P/TSX Comp 13,395 7.74%
S&P 500 Comp 1,806 26.62%
Dow Jones Industrial Avg 16,086 22.76%
Major Bond IndexDEX Universe 887 -0.77%
CommoditiesCrude Oil - WTI (US$/bbl) $93.09 1.38%
Gold (US$/oz.) $1,237.00 -26.17%
Silver (US$/oz.) $19.68 -34.79%
CurrencyCanadian Dollar (USD/CAD) $0.94 -6.68%
Personal Updates:
Jessie and Paul had a visit from daughter Erica Plater. Daughter Laura Furness and granddaughter Bronwyn visited as well. They were in town to support their sister, Kirsten Brown, who is battling breast cancer. Jess and Paul are sincerely grateful to all who have called, written and offered them and Kirsten kind words of encouragement and support.
Lori just got back from a week in New York City with her girlfriends. Some of the highlights included going to the lighting of the Christmas Tree in Rockefeller Center, attending the Christmas Spectacular Show featuring the Rockettes, skating in Central Park and shopping at Macy’s at midnight on Black Friday! It was a wonderful Holiday Season trip, no one does the Holidays like NYC!
Jay’s been battling a cough/cold for the past couple of weeks. It comes as no surprise living with Tuck and Charley who are basically just permanently infected petri dishes with legs. While the kids are getting excited for Christmas, the family is excited to celebrate Charley’s fifth birthday on the 8th.
Sour
ce: B
loom
berg
Commissions, trailing commissions, management fees and expenses all may be associated with mutual funds. Please read the prospectus before investing. The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and does not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.This newsletter has been prepared by the Johnson Legacy group of Raymond James Ltd., and expresses the opinions of the authors and not necessarily those of Raymond James Ltd. (RJL). Statistics, factual data and other information are from sources RJL believes to be reliable but their accuracy cannot be guaranteed. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Privacy legislation requires that anyone you are referring consents to having his/her information provided to us. This newsletter is intended for distribution only in those jurisdictions where RJL and the author are registered. The enclosed/attached article expresses the opinions of its author, not necessarily those of Raymond James Ltd. Statistics, factual data and other information are from sources believed to be reliable but their accuracy cannot be guaranteed. It is for information purposes only. Paul Johnson is a Financial Advisor with Raymond James Ltd. The views of the author do not necessarily reflect those of Raymond James. This article is for information only. Raymond James Ltd.,Member-Canadian Investor Protection Fund.
ReferralsOur greatest compliment is your endorsement of our services and advice. If you know a friend, family member or business
associate who would value our service we are accepting new clients and would appreciate your referrals. We would also like to extend a special thank you to our clients who have contributed to the growth of our practise with referrals.
The three of us, at Johnson Legacy Wealth
Management, appreciate our relationship with each
and every one of you, and are grateful to those of you
who have introduced friends, family and colleagues to
our practise.
We wish you the very best this Holiday Season has to
offer, and a happy, healthy, prosperous New Year.
