Newswire

Investment Perspectives

February 4, 2022

Invest at Market Highs? Time is the Great Equalizer

When is the best time to put new money to work in the markets? After equity markets reached new highs throughout 2021, some investors may feel hesitant. However, a recent Forbes article attempted to debunk the belief that investing at market highs is likely to lead to lower returns. Using historical S&P 500 Index data, it suggests that the returns for investing at all-time highs have been close to the average (chart 1). Of course, we should never discount the opportunity to invest at lower prices: lower valuations, higher dividend yields and better price points can help to enhance overall wealth. This is why many investors embrace market corrections when they occur.

For investors concerned about buying at highs and then seeing a decline, it’s worth repeating that history tends to favour long-term investors. The likelihood of negative returns reduces significantly as a holding period increases (chart 2). Time is the great equalizer

Download PDF Version Here

2022 TFSA Dollar Limit: $6,000, bringing the total eligible lifetime contribution amount to $81,500. Do you have TFSA contribution room sitting idle?

Systematic investing programs can also help to take emotion out of the investing decision. After all, being invested can be one of the best ways to generate wealth over the longer-term.

Chart 1: Average Annual Returns in S&P 500 Index, 1988 to 2020

Sources: S&P 500 TR Index, based on www.forbes.com/sites/kristinmckenna/2021/03/05/should-i-invest-when-the-market-is-high-dispelling-the-buy-low-sell-high-myth/

Chart 2: % of Positive Returns, Diversified Portfolio 1980 to 2020

Sources: Based on 20% S&P/TSX Composite Index, 20% S&P 500 Index, 20% MSCI EAFE Index, 40% FTSE Canada Universe Bond Index. Rolling periods from Dec. 1979 to Dec. 2020.

The information contained herein has been provided for information purposes only. Graphs, charts and other numbers are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information has been provided by J. Hirasawa & Associates and is drawn from sources believed to be reliable.
The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. This does not constitute a recommendation or solicitation to buy or sell securities of any kind. Market conditions may change which may impact the information contained in this document. Wellington-Altus Private Wealth Inc. (WAPW) and the authors do not guarantee the accuracy or completeness of the information contained herein, nor does WAPW, nor the authors, assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Before acting on any of the above, please contact me for individual financial advice based on your personal circumstances. WAPW is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.
©️ 2023, Wellington-Altus Private Wealth Inc. ALL RIGHTS RESERVED. NO USE OR REPRODUCTION WITHOUT PERMISSION

Recent Posts

SUMMER BRINGS HOME-BUYING SEASON

“Have we all just become economic snowflakes?”
This question emerged from a recent study analyzing the text of 200 million newspapers spanning almost two centuries. It concluded that both economic and non-economic sentiment have substantially declined over the past 50 years, despite far fewer economic setbacks

September Market Insights: Trump’s Trade War

The twilight of the American empire is a complex narrative shaped by historical precedents, economic policies, and an evolving global landscape. As the U.S. navigates this critical juncture, we must consider whether we are on the brink of a rebirth, as predicted by theories like the Fourth Turning—which emphasize the impact of extreme demographic shifts and the rise of populism—a recurring theme in U.S. economic history.

A BRIEF LOOK AT INDICES

WHAT’S BEHIND OUR INCREASING EXPENDITURES?

Live Long & Prosper: Better Health, Better Wealth

The opinions contained herein are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Wellington-Altus Private Wealth. Assumptions, opinions and information constitute the author’s judgement as of the date this material and subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Graphs and charts are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. All third party products and services referred to or advertised in this presentation are sold by the company or organization named. While these products or services may serve as valuable aids to the independent investor, WAPW does not specifically endorse any of these products or services. The third party products and services referred to, or advertised in this presentation, are available as a convenience to its customers only, and WAPW is not liable for any claims, losses or damages however arising out of any purchase or use of third party products or services. All insurance products and services are offered by life licensed advisors of Wellington-Altus. Wellington-Altus Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. All trademarks are the property of their respective owners.