A Volatile Year As Expected

A lot has gone on in our market since January 1st, 2022. We have had a war between Russia and Ukraine and experienced the highest inflation in Canada since 1983; we have experienced a very aggressive interest rate hike with the highest rates since the Financial Crisis in 2008, all while our society gets back to “normal” after COVID-19.

The events listed above have led to a volatile marketplace in 2022. But is that out of the ordinary for our markets? When we reflect on each of our years, we can come up with negative news stories that impacted our needs, and we can also come up with positive news. Volatility is a regular part of the investing process; accepting volatility will mean a much more enjoyable investment experience.

The chart below illustrates the last 20 years in the US market, a period where we ended with 17 positive calendar year returns. There was not one year we had where the market remained positive from January 1st to December 31st. That means in the last 20 years, the US stock market returns were negative at some point during each calendar year.

This year has been no different. 2022 will be remembered as a negative year in our market, but we have seen a drastic turnaround in the last three months alone. Let’s look at the DFA Global Equity Portfolio; for example, this is an all-stock portfolio invested in different countries and industries worldwide.

As of September 30th, 2022, this portfolio had a year-to-date return of -14.34%.

From the period of October 1st, 2022, to December 13th, 2022, that same fund had a rate of return of 11.84%.

Therefore, leaving the total year-to-date return of the fund at -4.2%. Which is a significant improvement in under three months.

So, while this year will be remembered as a “negative year” by most investors, I recognize it as a volatile year, no different than any of our past 20 years in the market. While the negative news articles are the ones that get the most attention, let’s shed some light on positive financial news that is going unnoticed and is playing a role in the market’s recovery in the past three months.

Positive news:

Supply Chain is recovering – Oxford Economics in the UK developed a measure for Supply Chain Strain. According to their metrics, the supply chain has improved significantly over the past several months.

Inflation is declining – With the supply chain recovering and interest rates increasing, inflation has begun to decline in Canada and the US. We still have a way to get back to our normal inflationary levels, but we are heading in the right direction.

Unemployment is low – In Canada and the US, unemployment numbers are historically low, which has improved dramatically since coming out of the pandemic.

The most common question from our clients is, what do you expect next year? Well, I think you can continue to expect volatility. You can continue to expect positive and negative news to impact our markets. But most importantly, if you stay committed to your financial plan, Invest in a globally diversified portfolio, rebalance where necessary, and accept the volatility we will continue to face, you can expect successful markets in your future.

Related articles

Episode 259: How To Beat The Stock Market

In this episode of ‘Think Smart with TMFG,’ your hosts, Rob McClelland and Mike Connon, explore the intriguing concept of ‘beating the stock market.’ Sharing profound insights from their years of experience in finance, they discuss how the quest to o…

Read More →

The Power Of Clearly Defined Goals

The Power Of Clearly Defined Goals   The significance of setting strict and attainable goals in financial planning cannot be overstated. They are the foundation …

Read More →

Capital Gains Inclusion Rate Increase

Capital Gains Inclusion Rate Increase   The Federal Government announced that the capital gains inclusion rate will increase from 50% to 66.7% for trusts, corporations, …

Read More →

Financial Planning Advice from Canada's Top Financial Advisors

Sign Up To Receive Email Updates On The Financial Industry And Complimentary Workshops.

By providing your e-mail address you provide The McClelland Financial Group of Assante Capital Management Ltd. with your express consent to send you electronic communications. If you choose to discontinue receiving e-mails, you may withdraw consent by contacting [email protected].


Get actionable financial insights from the Top financial planners in Toronto.

Toronto's Top Financial Advisors
Copyright Assante Wealth Management. © 2022

Disclaimer | Assante advisory services are offered through Assante Capital Management Ltd. Assante Capital Management Ltd. is a Member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada. The services described may not be applicable or available with respect to all clients. Services and products may be provided by an Assante advisor or through affiliated or non-affiliated third parties. Some services and products may not be available through all Assante advisors. Services may change without notice. Insurance products and services are provided through Assante Estate and Insurance Services Inc.

We have a team of advisors each specializing in varying portfolio sizes. Please let us know the approx. amount of your investable assets to help us to direct you to the advisor that is best suited to you.