Maintaining Perspective in Volatile Times

Today it seems as though there is no shortage of new challenges to test our resolve. As we try and move forward from two difficult years of battling a pandemic, the world has been confronted with the new crisis of the Russia/Ukraine conflict.

‍

For many, it may be difficult to detach from the current headlines. The geopolitical tensions in Europe have created new worries. From an investing perspective, it has added to the current market headwinds. With sweeping global sanctions put in place against Russia, there has been upward pressure on the price of oil and other commodities. At the time of writing, we continue to monitor the changing situation and its effects on the financial markets.

‍

At the same time, we are faced with new challenges here at home as we try and navigate the path to “normal.” Central banks are confronted with the difficult task of normalizing their accommodative policies that supported economies through the pandemic: raising interest rates and reducing the size of their balance sheets. This has been complicated by higher and more persistent levels of inflation.

‍

Financial markets are often quick to respond to the uncertainties and the start of 2022 has been no exception. With these uncertainties, volatility has returned to the equity markets. For investors, this may feel particularly unsettling since extended periods of volatility haven’t been seen for some time. Yet, we shouldn’t forget that volatility plays a common role in the equity markets, which were largely immune to significant periods of volatility for much of last year.

‍

During these times, taking a longer-term view may help to maintain perspective. Not to be little the current situation, but we have faced many challenges throughout time that have made it difficult to assess future prospects. And, yet, the equity markets have shown remarkable resilience over the longer term.

‍

Over the past 30 years, we have overcome a pandemic, credit and debt crises, recessions, many changing policies by the central banks — and even war. And, yet, the markets, as measured by the S&P/TSX Composite Index, returned over six percent annually over this time, not including reinvested dividends. The takeaway isn’t that the market is safe. It’s that bad news almost never supersedes the power of patience.

‍

Indeed, investors have required a particular amount of mental fortitude as of late. However, even with these new challenges, it shouldn’t be a time to act with haste or curtail investment programs that have been put in place to support your longer-term wealth goals. Patience, alongside careful monitoring and prudent adjustments through our support, should stand you in good stead. Continue to look forward and allow your assets to keep working hard for you.

‍

Remember, we are here to help.

This article was originally published in the Spring 2022 newsletter, "Challenging the Trend." Click here to view.