Climbing the Wall of Worry

"There's only one reason to stay invested and that's the compounding nature of markets."

In our new Insights in 5 series, Private Wealth Portfolio Manager Simon Bowers provides his market views and outlook for 2023. 

Simon discusses how investors who are nervous and are looking for a reason to sell need to recall that “normal” over the last twenty years has included: a global banking crisis, Brexit, the potential bankruptcy of several European nations, the bankruptcy of Iceland, the debt ceiling stalemates in the U.S., the Ukraine war, Covid, swine flu, and more. Over the same period, the S&P/TSX has had a total return of five times while the S&P 500 is up more than six-fold. 

• The expectation remains that risk assets carry an elevated risk to the downside.  
• While inflation has fallen, it remains above target.  
• We remain cautious taking a slightly more defensive posture given our views and the strong returns for risk assets thus far in 2023, especially in U.S. growth equities, which we are skeptical can continue.  ​ 
• We’ve maintained increased exposure to core Canadian fixed income and are overweight high-yield bonds. 
• The bond market is signalling that rates will remain elevated in the shorter term before eventually trending lower. Only the timing remains in question. 
• During the month, equity weightings in the IPC Private Wealth portfolios remained near target. 
• Our Portfolio Management team has been allowing drift to occur beyond their typical target +/- 10% thresholds, to maintain exposure to assets with positive momentum. 
• Within equities, we continue to have a slight overweight to international equities while U.S. and Canadian exposures are mildly underweight.  Small-cap and Global Real Estate are both underweight. 

 If you have concerns about your current investment plan, please speak with your Advisor.