Markets = Feelings

As of close on August 21, 2015 the TSX was down 5.6% (CAD) for the week (-7.9% YTD) and the S&P500 was down 5.8% (USD) for the week (-4.3% YTD).  I'd say that it was a bad week in the market.  It's a good thing that nothing has changed in my financial situation or with my financial plan.  Therefore, I plan on doing nothing.

As an investor, the aforementioned statement should be repeated EVERY time there is sharp volatility in the market (losses or gains).  Obviously, this is easier said than done.  The reason being, emotion dictates our actions, regardless of whether or not the response makes sense.

This is best illustrated by the below image and explanation by Carl Richards.

Source: Carl Richards, of Behaviour Gap

Market volatility reflects how we're feeling right now, and not how we're feeling tomorrow, next month, next year or over the next 20 years.  The August 21st sell-off occurred due to concerns of the health of the Chinese economy.  Unless your financial plan specifically called for changes should the health of the Chinese economy deteriorate, then you should not be making changes to your plan.
The next time you feel compelled to make changes to your portfolio, due to market volatility, stop and ask yourself these questions:

• What did I see that made me go from feeling okay to feeling like I need to do something?
• Did anything actually change in my life in connection with what I saw?
• Do I have any control over what I'm now worried about?

Carlo Cansino, FMA, FCSI, CFP
Senior Financial Planning Advisor
Assante Capital Management Ltd.

It's about time.

The Upshot Economic Trends This Week's Market Sell-Off May Not Be Such a Bad Thing

The 3.2 percent drop in the Standard & Poor's 500-stock index on Friday culminated the worst week for United States stocks since 2011, and put the index 7.5 percent below its recent peak on May 21. Many global markets have performed even worse, with stocks down across Asia and Europe. And the price of oil and emerging market currencies around the world continued a decline that dates to last year.

It's about time.

Read Full Article Here
Neil Irwin
Senior Economics Correspondent for The New York Times

The Latest

U.S. Housing Market Update

Optimism is growing in the U.S. housing market.  The U.S. National Association of Home Builders/Wells Fargo Builder Sentiment Index was released this month showing an increase to its highest level since 2005.  This month, the reading rose to 61, and was set at 60 in both June and July.  When the reading is above 50 it demonstrates that more builders view sales conditions as positive as opposed to negative. 

The Chairman of the National Association of Home Builders, Tom Woods, stated that: "The fact the builder confidence has been in the low 60s for three consecutive months shows that single-family housing is making slow but steady progress."

Stable employment growth gains and low mortgage rates have led to the increase of new home sales this year.  Over the past year 2.9 Million workers found new employment opportunities and the unemployment rate dropped from 6.2% to 5.3%.  This stability in the employment sector has supported spending in the housing market in addition to other markets.  The government reported an increase in new-home purchases by 21.2% during the first half of 2015 over 2014. 

Should you wish to learn more about mortgage solutions, please let us know and we would be happy to put you in touch with mortgage brokers within our professional network.

Assante Capital Management Ltd. is a member of the Canadian Investor Protection Fund and is registered with the Investment Industry Regulatory Organization of Canada. This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please make sure to see me for individual financial advice based on your personal circumstances. Insurance products and services are provided through Assante Estate and Insurance Services Inc.

The opinions expressed are those of the author and not necessarily those of Assante Capital Management Ltd.

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