Knowledge Centre

Whenever stock markets go into the doldrums, whether it is due to a decline in business prospects, economic shocks, simply a shift in the business cycle or ridiculous trade wars, many long-term investors will reflect on the prospects for staying invested and may even consider adding new money to what...

So far this year the S&P / TSX Composite Equity Index is up 3.1% but what does the future hold? Currently the biggest risk is centered around the new U.S. administration polices and specifically the potential impact from Canada being hit with new tariffs.

The Canadian dollar (CAD) finished 2024 at $1.45 Canadian dollars (CAD) for one U.S. dollar (USD), the weakest it has been since February 2002 when it was $1.60.

The past couple of years have been a very good time to be a Canadian equity investor. Canada has enjoyed back to back banner years with the S&P/TSX Composite returning 11.8% in 2023 and 21.7% in 2024, outperforming most international markets.

Conventional thinking states that stocks and bonds follow a “random walk” and no one can know in advance what the returns will be next month or next year. However, over the longer term investors can observe definite patterns once they have enough information.

Currently there is a high correlation amongst stocks around the world although that is starting to change, which historically has been a very good thing. Correlation is a statistical measure of the connection between two securities.

Historically, regardless of which political party was holding the U.S. presidency, there has been no significant difference for the performance of the stock market. As all investors know, predicting what will happen in the stock market is virtually impossible.

Up the Escalator, Down the Elevator is a phrase which describes the pattern in global central banks historic interest rate decisions. When the decision is made to increase interest rates, they tend to rise steadily over a long time; but when they turn, they can plunge rapidly.

For weightlifters this is a common question as it inquires the maximum weight they can lift. For investors the term benchmark is important as it indicates when investment performance meets a desired result. In both instances the objective is to reach a desired goal and then surpass it.

History never repeats itself in exactly the same way but similarities exist, especially in the timing of economic events or cycles.