Portfolio managers believe investors should be excited that the market is on sale – why doesn’t the media position it this way? Investors who have a medium time horizon will likely look back on this period as a buying opportunity. “Many investors will see declines in fixed income portfolios and allow their fear of loss to force them to sell their holdings. We want to buy from them.”
Read more:
https://www.edgepointwealth.com/article/earning-our-wings-1st-quarter-2022/
The US Bureau of Labor Statistics today released Consumer Price Index (CPI) data for the month of April, showing seasonally-adjusted price increase of only 0.3% from March levels. This reaffirms the view of some commentators that inflation should naturally slow from recent record year-over-year rebounds from pandemic-induced price decreases in 2020.
The graph below shows the month-over-month price level change, which has hovered between 0 and 0.5% per month for the past 5-10 years. You can see the negative inflation in 2020 March – May, which took CPI down 1.2% during that period, limiting total annual inflation to only 1.2% for the year. 2021 made up for that as demand for goods surged amid pandemic restrictions on services, and covid-induced supply chain disruption, with a 7% total inflation for the year. Those supply chain disruptions continue into 2022: first quarter 2022 inflation has been just shy of 3%, with 1.2% of that in March alone, with the conflict in Ukraine spiking oil and energy costs, which are feeding through to the price of all goods and services that use them.
Some goods prices have started to decline as their supplies become more balanced, used car prices being one example. Historically, oil prices have not stayed much over $100 per barrel for long, and even if they stay at that level, at least they would not contribute directly to further inflation in coming periods. For this reason, some analysts believe we have seen the peak in monthly inflation at 8.5% in March, and that the year-over-year figure, down to 8.3% in April, will continue to moderate as the year continues. This may take some pressure off central banks on the need for interest rate increases.
Each month-end we publish total return data for various investment market indices, as well as a composite portfolio return benchmark for model portfolios of three different asset allocations. These may be useful guides to reasonable performance of your own portfolio or its components.
Click to view the Index Return Table.
Click to view the Portfolio Benchmarks.
GIC rates are up substantially across all terms along with central bank rate increases and rising bond market yields. The graph below shows top GIC rates available from over 25 Banks and Trust companies as of March 31, 2022, and compares them with several prior periods. (Source: Cannex Financial Exchanges)
GICs have always been a reasonable alternative to bonds, but don’t have a market value that fluctuates like a bond, because they are generally not redeemable prior to their maturity dates. For investors who don’t require liquidity in part of their fixed-income holdings, GICs may be an excellent complement to a more growth-oriented investment portfolio.
Because we deal with a large number of banks outside the ‘Big 6’, we are usually able to obtain rates significantly higher than those posted at bank branches but still qualify for Canada Deposit Insurance coverage (Rules at www.cdic.ca ).
Click to view our current Top GIC Rates.
Each month-end we publish total return data for various investment market indices, as well as a composite portfolio return benchmark for model portfolios of three different asset allocations. These may be useful guides to reasonable performance of your own portfolio or its components.
Click to view the Index Return Table.
Click to view the Portfolio Benchmarks.