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We are very pleased to send you our monthly financial newsletter to keep you abreast of financial markets and world economy. We hope that you will enjoy reading these articles. As always, we welcome your comments and questions.


Enjoy your reading!

 

Team Beauregard Farina Tourangeau

1250 René-Lévesque Blvd. West

Suite 1500

Montréal, QC

H3B 4W8

Market Returns
              

Value as of

July 31 2016*

2016

Year to date

2015

S&P / TSX

14,583

12,1 %

-11,1 %

S&P 500

2,174

6.3 %

-0,7 %

Euro Stoxx 50 

2,991

-8.5 %

3,8 %

MCSI emerging markets

873

10.0 %

-17,0 %

Oil ($US/Barrel)

$ 41.60

-1.9 %

-38,8 %

Gold ($US/oz)

$ 1,358

27.5 %

-10,8 %

$CAD / $USD

$ 0.76

6.2 %

-16,5 %

Source : Bloomberg, Richardson GMP Limited

*Values are in local currency

 

For an updated performance table, please contact us.

Investment Strategies  

Are Canadian investors too cautious?
Canadian investors are different from others around the world. Investors here tend to be more risk averse and more likely to look for safer investment choices (see chart on the link below).

Despite their conservative investment views, Canadians may underestimate important risks. For example, many overestimate the safety of index funds. More than half (58%) of investors believe index investments are less risky and 64% think these funds will help them minimize losses. These statements aren't necessarily true. Passive investments have no built-in risk management and this false sense of security can leave clients exposed to significant risk. In terms of retirement, longevity should be the key risk. An income replacement goal is only part of the equation. 
 
  
Tax & Estate Planning Strategies 
 
Introduction to trusts
Trusts date back many hundreds of years and were primarily used for legal purposes. Today, however, trusts have evolved into an important tool from both a tax and estate planning perspective. The appropriate implementation of a trust allows for the effective flow-through of income and capital to a beneficiary to achieve substantial tax savings, while for legal purposes, a trust can provide a mechanism to control and preserve precious assets.
 
In the news                                     

Bonds are the new stocks and stocks are the new bonds
There is no doubt that the classic rate-sensitive segments of the stock market are trading expensively and there is some concern in corners of the market that when time comes for the big reflation trade, there will likely be a big correction coming in these areas of the equity space. But the reflation trade is a very big if. What we do know for certain is that we have been in a period of ultra-low rates now for seven years.

So here we are, and in 2016 one of the greatest ironies is that the first of the baby boomers have turned 70 and the median hit 60 years of age. This is the 80 million pig in a python that has driven everything in the past six decades in North America from politics to economics to finance, and is the power base that controls most of the wealth in society.
  
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The Brexit recession no longer looks so certain
Brexit apparently wasn't what it was cracked up to be. Rather than the major disruptive factor to the global economy and financial markets that was expected, the decision by Britons to exit the European Union has had a decidedly muted effect.

People view the post-Brexit uncertainty and how it's going to shake out as just another uncertainty in the market, but not one that's going to take precedence over a lot of other issues. The U.K. and U.S. are sophisticated markets. Sure, there are going to be lots of details to hammer out, but everyone is fairly certain they're going to get hammered out in a way that's not going to disrupt the economies of the major players.

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Emerging markets: time to invest?
Emerging markets have disappointed investors in recent years. Stocks have been held back by a mix of weak commodity prices, sluggish export growth, and political disruptions. The result has been a negative return of 11 percent for the MSCI Emerging Markets equity index since mid-2011, lagging a 49 percent upswing in developed markets. But recently, this trend has reversed. Emerging-market equities have rallied 12 percent this year, outpacing a 4-percent gain for rich nation stocks.

The fortunes of China's economy are key to the overall emerging-market performance. With an $11 trillion GDP, China is roughly equal in size to the next 10 largest emerging markets combined. While China's growth trajectory has slowed over the past year, the deceleration has not been abrupt. The 6.7 percent GDP expansion in the second quarter provided additional evidence that government stimulus is stabilizing activity.

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Eddy Farina, Fin. Pl., CIM
®
Senior Vice President, Investment Advisor
514.981.5727
 

" Why do they call it rush hour when nothing moves? "
 
- Robin Williams

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DISCLAIMER

The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson GMP Limited or its affiliates. Assumptions, opinions and estimates constitute the author's judgment as of the date of this material and are 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. Past performance is not indicative of future results. The comments contained herein are general in nature and are not intended to be, nor should be construed to be, legal or tax advice to any particular individual. Accordingly, individuals should consult their own legal or tax advisors for advice with respect to the tax consequences to them, having regard to their own particular circumstances. Insurance services are offered through Richardson GMP Insurance Services Limited in BC, AB, SK, MB, NWT, ON, QC,NB,NS,PEI and NL. Additional administrative support and policy management are provided by PPI Partners. Richardson GMP Limited is a member of Canadian Investor Protection Fund. Richardson is a trade-mark of James Richardson & Sons Limited. GMP is a registered trade-mark of GMP Securities L.P. Both used under license by Richardson GMP Limited.