Market Commentary August 30, 2018
The market numbers as of time of writing were all in the positive for the major North American Indexes. The TSX was just slightly ahead for the month, bringing year to date gains to 1.3%. The Dow Jones in New York was up 2.5% for August, totaling 4.9% for 2018. Leading the way for the year is the NASDAQ which is up 5.6% in August and 16.3% for 2018.
The other main index in North America, has seen the longest bull run in its history, when on August 22nd it hit a record high close. The high close led it to a positive gain of 323% since the market low in March of 2009. Very impressive numbers given that the US economy is still pointed in the positive direction and it looks like the Bull run will continue. The challenge with such a lengthy bull run in the markets, is that many investors have forgot what it feels like to go through an economic recession. Some investors have never experienced a recession. This false sense that the markets go up in a linear fashion, can lead to over exposure in risk tolerance, and unnecessary losses when a downturn happens. The lesson here is to stick to your risk tolerance, re balance the portfolio often so you are not over exposed. Re balancing helps to take some risk off the table and put some profits in your pocket for later.
There were a lot of good positive economic data from the US and Canada announced in August GDP growth was hitting recent highs, unemployment numbers were lower and lower, real estate prices continued to climb, and exports were increasing even with trade barriers. All this points to higher interest rates coming in both countries this year in the fall. Likely one more increase in Canada in 2018, and possibly 2 more in the US before the end of the year. Look for an additional 3-4 increases in 2019. The message here, if you are carrying variable rate debt, the time to pay it off is now.
Please see the attached link for additional market commentary.