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Assante Capital Management Ltd. January 2018

Assante Wealth Management

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The McClelland Financial Group

Robert McClelland from
The McClelland Financial Group
is ranked #7 in Wealth Professional's
Top 50 Advisors in Canada

2017 Market Overview

Happy New Year! With 2017 in the rearview mirror, we’re pleased to reflect on – and share with you – a newly released Dimensional Fund Advisors 2017 Market Review.

Overall, the view is quite pleasant for most global and domestic returns alike, even though few financial forecasters were predicting this sort of slam dunk at the outset of the year. If you think back to last January, there were plenty of reasons to wonder about the next 12 months – what with Brexit uncertainties, U.S. election upsets, continued terrorist threats hitting all too close to home, and the usual litany of other unknowns.

Digging deeper into the heady, mostly double-digit 2017 stock market returns, there’s another important theme found in this year’s data: While the profitability premium was positive across most markets, small-cap and value premia often underperformed their large-cap and growth counterparts.

These data points are relevant, because a typical evidence-based investment strategy calls for steadfast diversification across these expected sources of market premiums (as always, according to your unique financial goals and risk tolerance).

It’s especially pertinent to those who may be tilting their portfolio mix toward the very premia that happened to relatively underperform this year. If that’s you, and you’re in pursuit of these factors’ higher expected long-term returns, you may be wondering: “Should I alter my plans?”

Unless your own goals or circumstances have changed, our short, evidence-based answer is, no, probably not. As described in Dimensional’s Year in Review, “Premiums can be difficult if not impossible to predict and relative performance can change quickly, reinforcing the need for discipline in pursuing these sources of higher expected returns.”

To use an analogy, think of your investment experience as a cross-continental trek. You get to define your desired destination – although, as in real life, you aren’t guaranteed to reach it. In pursuit of your journey’s end, you also get to choose between a low, slow, temperate trail (lower risk and lower expected returns), or a potentially swifter route with more peaks, valleys and weather extremes (higher risk and higher expected returns).

Whichever route you’ve chosen for your financial journey, don’t be too surprised when you encounter what you’ve signed up for. And remember, the most likely way to achieve your goals is almost always in the form of a steadfast, forward march.

Which brings us to our fundamental advice, this and every year. If you’ve not yet put your investment plans in place, consider that among your most important New Year’s resolutions. Balance your risk and expected return exposures according to what you want and need out of the markets. After that, enjoy the balmy returns where they exist and as they last. Be prepared to soldier through the storms when they periodically arise as well.

Last but never least, let us know how we can help.

Dimensional Fund Advisors 2017 Market Review.

Ask your advisor »

Bubbles of Smoke?

Weed stocks. Is everybody really making money? Well, given that stock market transactions are binary (buyer and a seller), only 50% of people are making money. Is it too late to get in? Well, we’ve seen tremendous growth in the last 4 months. The four largest marijuana stocks are up anywhere from 200% - 400%.

So, we can assume buying into marijuana stocks is a timing/speculative play. And we know how that normally works out for the average investor. Recent commentary from QV investors Inc. suggests that the growth in the 4 largest marijuana stocks is not based on the fundamentals.

Let’s review Molson Coors as the market leader in Canadian brewing. Its market capitalization is approx. $18B. It had revenues of $13B over the last 12 months. If we take the 4 largest marijuana companies and compare their combined market capitalization to that of Molson Coors, we will find that they are comparable in size ($17.9B). Yet, their total combined revenue was a mere $148 million. It is very difficult to justify their value with that amount of sales. Similar to the 1990’s dot-com bubble, an element of irrational exuberance comes to mind.

Our advice: avoid the smoke screen, and stay true to a disciplined, globally diversified investment approach.

Carlo Cansino, FMA, FCSI, CFP
Senior Financial Advisor

The McClelland Financial Group
of Assante Capital Management Ltd.

2017 Tax Preparation Service

Contact Gala Pazin
905-771-5200 ext. 231
[email protected]

Stay Tuned for February 26th Lunch and Learn at The Thornhill Golf and Country Club!

7787 Yonge Street, Thornhill, ON, L3T 7L2
www.tmfg.ca | [email protected]
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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.

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