Our glorious and all too brief summer season is upon us. And what a summer it has been. Can you recall when we have had such consistently beautiful weather? Canadians have revelled by the lake, and festivals of all kinds have been blessed with abundant crowds of fun-loving audiences. It certainly has been relaxing. It sounds almost too good to be true.
And then there are the terrible headlines. We heard enough about Greece and the BP-Gulf story over the month of July to last a lifetime. Yes we need to be informed, but do we really need to hear every minute detail every second of the day? It can be a really big negative on an otherwise bright day.
As investors we feel the need to know what’s going on in the world so that we can make sound decisions about our investments. In reality there’s very little one can do in response to the hysteria that gets reported every day by the media.
Financial and political news help define the environment in which our investments operate, but will this news affect the ability of your investments to thrive and prosper into the future? If we take a long-term view, the answer has to be no. It doesn’t really matter if the Bank of Canada raises interest rates a full percent over the summer or even if it takes Greece decades to erase its deficit or even defaults, yet again, on its debt.
The world has had a history of chaos. Let’s go back to 1800. Europe convulsed through the Napoleonic wars, the US was at war with Britain and Canada in 1812, and the US had their Civil War followed by the abolition of slavery and the assassination of a President. Can you imagine the agony our forefathers would have suffered if the world had had radio, television, and internet throughout that period? There were financial panics and banking crises in 1819, 1837, 1857, 1893, 1907, 1929 and more recently 2009. In the last century we saw two world wars, a Great Depression, a Cold War and a proliferation of nuclear weapons.
Yet despite that history of chaos, US equity markets continued to grow at about an average of 6.5% above inflation throughout the past two centuries. If the Civil War, two World Wars, and a Depression could not interrupt the market’s assent, do the headlines about Greece, Chinese inflation or the Bank of Canada rate hike matter at all?
We feel for the people of Greece and wish the BP oil spill had never happened. But we must move on and take steps to ensure that these blips on the radar screen do not side track us into making financial mistakes that could affect us for the rest of our lives. Stay invested, invest more when you can, and thoroughly enjoy the rest of the summer.
The foregoing is for general information purposes and is the opinion of the writer. This information is not intended to provide personal advice including, without limitation, investment, financial, legal, accounting or tax advice. Please call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., to discuss your particular circumstances or suggest a topic for future articles at 613-798-2421 or E-mail rick@invested-interest.ca.