Investing Insights - Mackenzie Investments€¦ · Subprime Mortgage Crisis 3/9/2009 68.6% 95.1% Average Appreciation 33.7% 45.0% Snapshots in time of significant negative international

March 31, 2019

Investing Insights

Source: Bloomberg (Mar 2020)

Mackenzie Investments Investing Insights 2

Managing Downturns



Expansion vs. Recession in the US

Source: National Bureau of Economic Research

0

20

40

60

80

100

120

140

19

02

19

07

19

10

19

13

19

18

19

20

19

23

19

26

19

29

19

37

19

45

19

48

19

53

19

57

19

60

19

69

19

73

19

80

19

81

19

90

20

01

20

07

20

17

Nu

mb

er

of

Mo

nth

sExpansions

Recessions

Current Expansion

Recession Expansion

16 42

22 27

18 35

11 59

1919-1945 (6 cycles)

1945-2009 (11 cycles)

Average, all cycles:

1854-2009 (33 cycles)

1854-1919 (16 cycles)

Recession is the number of months from peak to trough. Expansion is the number of months from the previous trough to latest peak. For example: 120 months – March 1991 to March 2001

expansion


Mackenzie Investments Investing Insights

Price Return (from trough)

Peak Date Trough Date 3 months 1 year 10 years

Sep 2 1929 Jun 1 1932 332.61 64.20 (80.7%) 33 45.8% 79.2% 37.9%

Jul 3 1956 Dec 3 1957 617.67 432.11 (30.0%) 17 5.8% 26.8% 108.1%

Oct 1 1973 Sep 3 1974 1,329.28 832.98 (37.3%) 11 1.4% 17.2% 186.5%

Nov 28 1980 Jul 8 1982 2,402.23 1,346.35 (44.0%) 19 26.2% 84.1% 153.7%

Aug 13 1987 Oct 28 1987 4,112.86 2,837.79 (31.0%) 3 7.9% 20.0% 137.4%

Apr 22 1998 Oct 5 1998 7,822.25 5,336.15 (31.8%) 6 24.8% 31.0% 102.5%

Sep 1 2000 Oct 9 2002 11,388.80 5,695.33 (50.0%) 25 18.9% 33.5% 115.5%

Jun 18 2008 Mar 9 2009 15,073.13 7,566.94 (49.8%) 9 39.4% 57.5% N/A

(43.5%) 16 18.7% 41.7% 121.0%

(37.4%) 13 14.2% 35.4% 137.6%

8.00%

9.00%

Period

Peak Value Trough Value Decline

Months from Peak

to Trough

Average:

Ex-Period 1 (Great Depression):

Annualized Price Return (excludes dividends)

Average:

Ex-Period 1 (Great Depression):

4

S&P/TSX Declines Greater Than 30%



Crisis Market Low 1 Year Later 2 Years Later

The Korean War 7/13/1950 28.8% 39.3%

Cuban Missile Crisis 10/23/1962 33.8% 57.3%

JFK Assassination 11/23/1963 25.0% 33.0%

1969 to 70 Market Break 5/26/1970 43.6% 53.9%

1973 to 74 Market Break 12/6/1974 42.2% 66.5%

1979 to 80 Oil Crisis 3/27/1980 27.9% 5.9%

1987 Stock Market Crash 10/19/1987 22.9% 54.3%

Desert Storm 10/11/1990 21.1% 30.2%

Soviet coup d'état attempt 8/19/1991 11.1% 21.2%

Asian Financial Crisis 4/2/1997 49.3% 76.2%

Dot-com Bubble Crash / Sept 11 / Enron 10/9/2002 33.7% 44.8%

Invasion of Iraq 3/11/2003 38.2% 50.6%

North Korean Missile Test 7/17/2006 25.5% 2.1%

Subprime Mortgage Crisis 3/9/2009 68.6% 95.1%

Average Appreciation 33.7% 45.0%

Snapshots in time of significant negative international events from 1950 to March 2009, and the subsequent change in market value from

the S&P 500 low in that calendar year to one and two years hence.

5

Staying Invested May Improve Returns



Bear Market Decision in September 1974 $10,000 Invested in the S&P 500 on January 31, 1973

$21,266 $21,846

$28,465

$34,254

$67,091

$7,820 $8,033$10,468 $12,596

$24,671

$5,816

$6,121 $6,426 $7,101 $9,581$16,145

$10,000 $9,285 $9,465 $9,545 $8,587$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$10,000

Invested on

Jan 31, 1973

3 months

later

6 months

later

9 months

later

12 months

later

20 months

later (Market

Low - Sept

1974)

6 months

after market

low

12 months

after market

low

2 years after

market low

5 years after

market low

10 years

after market

low

Invested another $10,000 in the S&P 500 on Sept 30, 1974Stayed invested in the S&P 500Removed from market and invested in a GIC



Bear Market Decision in September 2002 $10,000 Invested in the S&P 500 on August 31, 2000

$16,306$19,315

$21,992

$24,685

$31,842

$5,804$6,875 $7,829

$8,788$11,337

$10,000 $8,688 $8,216 $8,349 $7,561

$5,527

$5,618 $5,708 $5,895 $6,087 $6,493

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$10,000

Invested on

Aug 31, 2000

3 months

later

6 months

later

9 months

later

12 months

later

2 years, 1

month later

(Market Low

- Sept 2002)

6 months

after market

low

12 months

after market

low

2 years after

market low

3 years after

market low

5 years after

market low

Invested another $10,000 in the S&P 500 on Sept 30, 2002Stayed invested in the S&P 500Removed from market and invested in a GIC



Bear Market Decision in March 2009 $10,000 Invested in the S&P 500 on January 31, 2007

$5,826

$21,211$23,703

$27,411

$29,752

$46,776

$7,809$8,726

$10,091 $10,953

$17,220

$5,883 $5,941 $6,057 $6,176 $6,642$10,000 $10,353 $10,210 $10,921 $9,769

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$10,000

Invested on

Jan 31, 2007

3 months

later

6 months

later

9 months

later

12 months

later

2 years, 2

month later

(Market Low -

Mar 2009)

6 months

after market

low

12 months

after market

low

2 years after

market low

3 years after

market low

6 years, 6

months after

market low

Invested another $10,000 in the S&P 500 on March 31, 2009

Stayed invested in the S&P 500

Removed from market and invested in a GIC



Recovery from the Previous Recession S&P/TSX Composite Index

7000

9000

11000

13000

15000

17000

19000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Return from bottom to today

77%



Confidence & Volatility



0

20

40

60

80

100

120

140

160

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

US Consumer Confidence Conference Board’s US Consumer Confidence Index



Investor Confidence State Street Investor Confidence Index (Reflects Institutional Investors)

60

70

80

90

100

110

120

130

140

150

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Global North America Europe Asia



Market Volatility CBOE Volatility Index vs. S&P 500 Index

600

1,100

1,600

2,100

2,600

3,100

3,600

0

5

10

15

20

25

30

35

40

45

50

Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20

CBOE Volatility Index (lhs) S&P500 (rhs)



Diversification



Growth of $10,000 over the past 10 years as at March 31, 2020

15

A “Balanced” Approach

$5,000

$7,500

$10,000

$12,500

$15,000

$17,500

$20,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

S&P/TSX Composite Index

Bloomberg Barclays GlobalAgg Total Return Index

Value Unhedged CAD

Balanced (60% TSX/40% Bond Index)



Global Market Results

Equity Market Returns Bond Market Returns

0%

50%

100%

150%

200%

250%

300%

350%

400%

Canada US EU Japan

-2%

-1%

0%

1%

2%

3%

4%

Canada US EU Japan

up to March 31, 2020; total returns indexed to 100, local currency up to March 31, 2020; local currency



Staying the Course



20 Years of the S&P 500

$15,203 $13,858

$10,867

$7,992

2.1% 1.6% 0.4% -1.1%

$(10,000)

$-

$10,000

$20,000

Fully invested all weeks Missed best 1 week Missed best 5 weeks Missed best 10 weeks

Value of $10,000 invested from March 31, 2000 to March 31, 2020 in CAD



20 Years of the S&P/TSX Composite

$12,525 $11,018

$7,783 $6,122

1.1% 0.5% -1.2% -2.4%

$(10,000)

$-

$10,000

$20,000

$30,000

$40,000

Fully invested all weeks Missed best 1 week Missed best 5 weeks Missed best 10 weeks

Value of $10,000 invested from March 31, 2000 to March 31, 2020 in CAD



20 Years of the S&P/TSX Composite Investing $2,000/year in S&P/TSX Over 20 Years

$75,819

$66,278 $69,831

$64,726

$47,826

$-

$25,000

$50,000

$75,000

$100,000

Perfect Timer Dollar Cost Averager New Year's Investor Terrible Timer Bought T-Bills not Stocks



Always Remember… It’s Only a Cycle Market Cycle Relative to Economic Cycle, but Each has Differences

Peak Top

Trough

Mid Recovery Mid Recession

Late Bear

Early Bear

Bottom

Late Bull

Early Bull

For illustrative purposes only



Long Term Investing



Bull & Bear Markets

-26% -17% -15% -25% -35% -39%-25% -20% -27% -38%

-21%

-43%-17%

85% 81%63%

82%

288%

253%

44%

203%

109%

16%

168%195%

-100%

-50%

0%

50%

100%

150%

200%

250%

300%

350%

19

56

19

57

19

58

19

59

19

60

19

61

19

62

19

63

19

64

19

65

19

66

19

67

19

68

19

69

19

70

19

71

19

72

19

73

19

74

19

75

19

76

19

77

19

78

19

79

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

Ch

an

ge

Average gain in bull market: 129%

Average length of bull market: 54 months

Average loss in bear market: (28%)

Average length of bear market: 9 months

Bull & Bear Facts

S&P/TSX Composite Index to March 31, 2020



Bull & Bear Markets: S&P/TSX Composite

The Risks and Rewards of Investing:

This chart represents the bull and bear markets in the S&P/TSX Composite Total Return since 1956. All bars above the line are bull markets; all bars below are bear markets.

For the purposes of this illustration, a bull (bear) market is defined as a positive (negative) move greater than 15% that lasts at least 3 months.

Investor Behaviour:

According to the chart, markets spend more time in positive territory (bull) than negative (bear).

Bull markets are, on average, longer and more intense, providing a more significant percentage change.

On average bear markets are more brief, and yet engender fear. It is during these periods that there are significant investment ‘bargains’ to be found.

Investor discipline during bear markets is critical.



Bull & Bear Markets

104% 90%52%

76% 86% 87%

280%

72%

526%

108%

451%

-14% -22% -16% -29% -43%-14% -17% -30% -15%

-45% -51%-12%

-100%

0%

100%

200%

300%

400%

500%

600%

19

56

19

57

19

58

19

59

19

60

19

61

19

62

19

63

19

64

19

65

19

66

19

67

19

68

19

69

19

70

19

71

19

72

19

73

19

74

19

75

19

76

19

77

19

78

19

79

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

Ch

an

ge

Average gain in bull market: 144%

Average length of bull market: 55 months

Average loss in bear market: (27 %)

Average length of bear market: 14 months

Bull & Bear Facts

S&P 500 Index to March 31, 2020



Bull & Bear Markets: S&P 500

The Risks and Rewards of Investing:

This chart represents the bull and bear markets in the S&P 500 Total Return since 1956. All bars above the line are bull markets; all bars below are bear markets.

For the purposes of this illustration, a bull (bear) market is defined as a positive (negative) move greater than 15% that lasts at least 3 months.

Investor Behaviour:

According to the chart, markets spend more time in positive territory (bull) than negative (bear).

Bull markets are, on average, longer and more intense, providing a more significant percentage change.

On average bear markets are more brief, and yet engender fear. It is during these periods that there are significant investment ‘bargains’ to be found.

Investor discipline during bear markets is critical.



Real Return of a GIC

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

Mar-90 Mar-92 Mar-94 Mar-96 Mar-98 Mar-00 Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14 Mar-16 Mar-18 Mar-20

Tota

l R

etu

rns

1 Yr GIC Returns

1 Yr GIC After 40% Marginal Tax

1 Yr GIC Real Return (After Inflation)

Mackenzie Investments

This document includes forward-looking information that is based on forecasts of future events as of March 31, 2020.

Mackenzie Financial Corporation will not necessarily update the information to reflect changes after that date. Forward-looking statements are not

guarantees of future performance and risks and uncertainties often cause actual results to differ materially from forward-looking information or

expectations. Some of these risks are changes to or volatility in the economy, politics, securities markets, interest rates, currency exchange rates,

business competition, capital markets, technology, laws, or when catastrophic events occur. Do not place undue reliance on forward-looking information.

In addition, any statement about companies is not an endorsement or recommendation to buy or sell any security.“

The content of this document (including facts, views, opinions, recommendations, descriptions of or references to, products or securities) is not to be

used or construed as investment advice, as an offer to sell or the solicitation of an offer to buy, or an endorsement, recommendation or sponsorship of

any entity or security cited. Although we endeavour to ensure its accuracy and completeness, we assume no responsibility for any reliance upon it.

Unlike mutual funds, the returns and principal of GICs are guaranteed.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus

before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

Index performance does not include the impact of fees, commissions, and expenses that would be payable by investors in the investment products that

seek to track an index.

The rate of returns shown is used only to illustrate the effects of the compound growth rate and is not intended to reflect future values of returns on

investment."

28

Disclaimer

Documents

Investing Insights - Mackenzie Investments€¦ · Subprime Mortgage Crisis 3/9/2009 68.6% 95.1% Average Appreciation 33.7% 45.0% Snapshots in time of significant negative international