{"id":1570,"date":"2023-10-01T15:52:46","date_gmt":"2023-10-01T15:52:46","guid":{"rendered":"https:\/\/advisor.wellington-altus.ca\/goldsealfinancialgroup\/?p=1570"},"modified":"2026-02-18T15:10:51","modified_gmt":"2026-02-18T20:10:51","slug":"gold-seal-monthly-review-oct-2023","status":"publish","type":"post","link":"https:\/\/advisor.wellington-altus.ca\/goldsealfinancialgroup\/gold-seal-monthly-review-oct-2023\/","title":{"rendered":"October 2023 Monthly Review"},"content":{"rendered":"

\"\"<\/p>\n

Of Cycles and (Un)Certainty<\/span><\/h4>\n

September saw the Gold Seal Financial Group take to the roads for our annual inspection of the outside-BC facets of the Canadian economy as Brendan, Ryan and Tanya made their way cycling from the western provincial border of Saskatchewan to the Manitoba welcome sign. While the trip had always been intended as the next leg of Brendan\u2019s effort to cross Canada one province at a time, the team was proud to dedicate the ride to Kelowna\u2019s wildfire relief efforts with a fundraiser benefitting local not-for-profit \u201cMama\u2019s for Mama\u2019s\u201d. Thanks to our donors, sponsors, and dedicated chase-car support, we were able to raise over $5,000 for the cause and even have a little fun along the 635km journey through the Canadian prairies.<\/p>\n

The Q3 Asset Mix Committee meeting that took place in a very run-down motel on a long and windy day was a testament to the fact that even in the remote backroads of Canada, wealth management (and our clients) remain our top priority. In fact, we found that there\u2019s something special about eight hours on a bicycle; with nothing but the prairie wind, a wheat field on the left and a canola field on the right. It gives you the time and headspace to reflect on the lessons we can draw from cycling. As our North American economy and markets continue to weather substantial headwinds, we\u2019d like to share some of our most important insights from that trip so that we all know how to prepare and pace as we continue on our journey.<\/p>\n

The best plans are not the most defined, but the most dynamic.<\/p>\n

The statement \u201cI am going to cycle across Saskatchewan\u201d is about as decision useful as \u201cI would like to retire comfortably\u201d. These are goals; expressions of long-term ideals that necessitate the development of a sound and achievable plan of action. The next step then becomes a further defining of our goals and the natural question then becomes \u201cby when?\u201d. Whether you\u2019re seeking Freedom 55 or determining cycling kilometers required per day to reach your destination, the discussion over the essential questions must be open and candid, recognizing your present circumstances and constraints. When Ryan and Brendan were planning their Saskatchewan trek a few days before they headed out and Ryan admitted that his most recent cycling training session was three months prior, their Saskatchewan plans quickly became a five-day trip instead of four. Transparency is paramount to setting meaningful and achievable progress and milestones.<\/p>\n

With the goal better defined (getting across Saskatchewan safely and in one piece), we collectively agreed on achievable milestones that began to shape an action plan. We divided the overall trip into more digestible segments, which would ultimately lead to accomplishing our goal if we stayed the course. The most well-constructed plan is not the one with the most detail on its measures or milestones, but the one that is most resilient to change. Similarly, our capital markets mimic life in that they are both subject to factors out of our control, and the best “training and cycling” plan will always still be vulnerable to the market environment.<\/p>\n

\"Welcome<\/p>\n

Day one of our trip served as a warm-welcome to the province with westerly winds at our back pushing our pace to a generously sustained 44 km\/hr. Our team would argue that the markets have enjoyed such wind-at-the-back conditions through most of the past decade. We made more progress towards our overall goal that day, and what\u2019s more – it was easy.<\/p>\n

As we added distance and cautiously overshot our Day 1 rest stop, we were very careful to continuously monitor our trusted phone weather app to guide our pacing. Remaining tuned into the environment proved essential as one of our worst fears was confirmed: the wind was unlikely to remain at our backs, instead we would face heavy headwinds over the coming days. Too often, we have seen plans and portfolios that fall victim to this same trope: going too far when conditions are easy leaves you already exhausted and lagging further behind when the winds turn. When conditions are accommodating, it’s important to take advantage of them with moderation. On Day 1, we overshot our anticipated milestone but did not stray too far beyond our planned motel stay – it was important to keep disciplined efforts within our skillsets and abilities.<\/p>\n

Both Day 2 and Day 4 were those that Ryan had endearingly titled \u201cHands Down the Worst Cycling Day of My Life.\u201d These brought conditions that our team feels is more reminiscent of the tightening financial conditions we experience today. Resolve is tested as times are no longer easy, and less progress towards the overall goal is made. The reality of a resilient plan is that milestones are adjustable, and while it\u2019s important to address how to make up lost-ground when times are tough, what doesn\u2019t change is the need to focus on the goal and to keep pedaling. We didn\u2019t change our destination or course when the ride got more difficult, and when you\u2019re already murmuring expletives into the wind, it\u2019s no longer the ideal time to broach the conversation.<\/p>\n

It\u2019s important to select the right tool for the job.<\/p>\n

Your bike, like your portfolio, is just the tool we\u2019re using to get from point A to B. You can have every new piece of technology on that bike and every new, cool investment in your portfolio, but reaching your destination successfully (and safely) is mostly going to be determined by your own behavior, endurance and ability to stay the course when the road gets rough. In our case, we had set an aggressive distance target and brought aggressive, road-only bikes to meet that target. These are certainly not the bikes we would take if our distance was shorter or if the environment was mountainous instead of a paved road. Different conditions, goals and environments call for different tools. The art and science of portfolio construction is about finding the most comfortable and efficient fit for the financial goals we\u2019re trying to achieve, and even the most accomplished cyclists seek the consult of bike fitting specialists to ensure the best and safest ride. Even within the same set of goals, modifications must be made to our tools to ensure that our journey is not only achievable, but comfortable. For instance, Brendan has the genetics and stature of a Viking, and Ryan very visibly plays computer games at length. The geometry and setup of each of their bikes, while very similar, have been modified to better suit their positions and keep them as comfortable as possible.<\/p>\n

While each bike will have some differentiators, there\u2019s a few shared fundamentals that were common in constructing each, just as there are for our investment portfolios. One top priority in fitting a distance-geared road bike is remaining light-weight to reduce unneeded drag, which is also a goal that\u2019s shared with investment selection. We ultimately seek components and investments that are the lightest in fees without sacrificing the structural integrity of our tool for its purpose. Lightest is not always best, and weight as the only priority has a tendency to result in a fragile bike that falls apart before reaching its destination. Similarly, race-to-the-bottom fee structures have a tendency to fall behind in quality and performance. There is a delicate balance that must be achieved whereby we\u2019re willing to take on a degree of weight in the right places to ensure a successful journey, but not so much as to hinder performance.<\/p>\n

We must also be cognizant that the accepted \u201cbest-fit\u201d of our tool will naturally evolve over time as new technology, components, investments or opportunities become available. Dense metal frames evolved to carbon fiber components just as traditional stock and bond portfolios began to incorporate alternative investments and private market opportunities. It\u2019s accepted that as long as best-fits will continue to evolve, it will remain important to keep abreast of new technology and opportunities and evaluate the role that they may play in ensuring we build the best tool for the job.<\/p>\n

Partnerships and your people determine success.<\/p>\n

For those that have not yet had the opportunity to go on a long-distance cycle, it can be very easy to think of the sport as a solo activity. Investing has also developed options as a solo sport lately with the emergence and availability of self-directed platforms. And, for a time, both activities can be. It\u2019s not actually until Day 4 when that prairie wind is 29 kms\/hr against you that you really appreciate having a partner to rotate into the lead position and cut the wind. The idea behind a peloton riding formation is to share the more strenuous lead position with your partners, rotating to the back when you need to recharge. As you reduce your time in the resistance position, you can ultimately reach further distances together than you would be able to as a solo endeavor. The thing is, when the wind is already at your back and conditions are easy, you\u2019re barely going to notice the impact of that partnership formation on your performance. When the wind is against you, you\u2019re cycling up a hill, or market conditions tighten, not having that partnership puts the ability to accomplish your goal at risk. The relationship goes two ways, and we don\u2019t carry our clients just as we don\u2019t carry the lead constantly. We partner with our clients, and while it’s the efforts and behavior from both sides that are needed to ensure a successful ride, it helps to have an experienced partner that knows how to manage formation and has dealt with winds before.<\/p>\n

Less quantifiable is the impact of support in sticking with a plan. A plan can help divide destination goals into meaningful milestones, but milestones don\u2019t get achieved without regular check-ins with your support team. Make no mistake, this was a ride that was taken 15-20 kilometers at a time, each leg divided by meeting with our support vehicle managed by a cheering Tanya. The meetings were a time to evaluate our pace so far and discuss needed changes. Sometimes that was due to factors out of our control like wind or incline, and sometimes it was personal or motivational factors. We made milestone adjustments, we adjusted our tools, and managed nutrition to get us to the next meeting, all the while keeping tabs on the forecast. These pit-stop check-ins were ultimately what made the ride possible, and leaving the day\u2019s plan at \u201csee you in the next town\u201d would have been as disastrous as saying \u201csee you at retirement\u201d.<\/p>\n

\"\"<\/p>\n

When recounting highlights of our journey as a team over dinner with a new contact last week, it had come up that we\u2019d done this ride on behalf of our wealth management firm. Our new contact had asked us what our read was on the current market environment, and specifically whether they should be pulling out of the stock market and running to cash. Given the great deal of reflection we\u2019d done on our experience, the questions we had were fairly intuitive:<\/p>\n