The market bottomed last October despite ongoing concerns about inflation, higher rates, recessionary risks, and a banking crisis. While the media headlines and youtube podcasts are filled with “crisis” headlines, as noted in “Analysts Raise Estimates,” expectations for growth and earnings are rising.
“If there is ‘no recession in 2023,’ then such would suggest the decline in corporate earnings and profit margins is complete. Therefore, such would suggest that equities are fairly valued at current levels supporting the return of a more bullish trend. Currently, the Bloomberg Economic Growth Consensus for the U.S. economy is rising, with only one-quarter of negative growth expected.”
“Given that earnings are derived from economic activity, then the current decline in earnings should bottom before the trough in economic activity. Interestingly, in mid-March, S&P Global released its earnings forecast for the S&P 500 through the end of 2024. As with economic analysts, S&P sees earnings bottoming in the first quarter and returning to its January 2022 peak.”
“Interestingly, the financial markets have factored in these improving outlooks since the October lows. Such is unsurprising as investors begin to pay up for investments based on more robust forecasts. Therefore, if the earnings forecasts are correct, the market should reflect those forecasts and rise toward the previous market peak.”
While economists and analysts are basing their views on the premise of a “no recession” scenario, the market bottomed in October on hopes of a reversal of monetary tightening by the Federal Reserve.
It is currently unclear if either view is correct.
Nonetheless, as investors, several technical indicators support the notion that the market bottomed in 2022, suggesting an alternative view of an ongoing bear market.
Still In A Correction
While there have been many discussions about the “bear market” last year, such is not the case. Yes, the market was down more than 20% last year, which is the media’s definition of a bear market. However, is an arbitrary 20% decline still a valid measure?
To answer the question of validity, let’s agree on a basic definition.
A bull market is when the market price trends higher over a long-term period.
A bear market is when the previous positive trendends, and prices trend lower.
The chart below provides a visual of the distinction. When looking at price “trends,” the difference becomes apparent and valuable.
The distinction is also essential to understanding the difference between “corrections” and “bear markets.”
“Corrections”generally occur over short time frames, do not break the prevailing price trends, and are resolved by markets reversing to new highs.
“Bear Markets” tend to be long-term affairs where prices grind sideways or lower over several months to two years as valuations “mean revert.”
A good example of the inaccuracy of the 20% rule was the 35% price decline in March 2020. That decline was unusually swift using monthly closing data. However, that decline did not break the long-term bullish trend and quickly reversed to new highs, suggesting it was a “correction.”
The massive fiscal impulse into the financial system and the economy in 2020-2021 led to an unprecedented deviation above the bullish trend. The market is in the process of correcting that excessive deviation but has yet to retest the previous bullish trend. Given such a large deviation, that correction process will require a deeper price decline or a long period of price consolidation.
Regardless of how the price deviation is resolved during the correction process, the secular bull market that started in 2009 remains intact as long as the rising price trends continue.
The long-term technical structures of the market also confirm this view.
Long-Term Technicals Remain Bullish
Daily price charts can provide a short-term view of market psychology from days to weeks. The problem with daily price analysis is volatility can cause short-term swings in the market that can disconnect from the market’s underlying trend or fundamental data.
The volatility gets smoothed out if we slow that price action by examining weekly pricing data. Such reveals a clearer picture of the market delivering a more bullish message.
The S&P 500 scored seven weekly closes above its 40-week moving average and then successfully retested that breakout level. Such suggests the return of a more bullish trend. Assuming supports continue to hold, the next major resistance levels are the February highs of 4200, then the August 2022 peak at 4325.
Notably, the October lows held critical support at the 200-week moving average, which remains support for the market since the 2009 lows.
Furthermore, the vast majority of the major markets and sectors have registered weekly buy signals. Such has historically denoted a more bullish bias to the overall market for the next 12 months.
The chart below shows the moving average crossover signal back to 1998. The orange bars are periods where equity exposure should be reduced. As you will note, the periods of a positive cross, where equity exposure should be increased, usually last for a year or more. Since 1998, there were only two false signals to increase equity exposure in 2002 and early 2016.
From an investment viewpoint, the technical action of the market suggests that the market bottomed in 2022. However, much like we saw in 2002, there is a risk that one more leg lower is possible.
Navigating What Comes Next
As noted, investors’ biggest problem is discerning between market action and the economic and fundamental dynamics.
Let me be very clear…I have no ideaif the market bottomed in October or not.
However, there are some rules we can follow.
Rule #1: Cut Losers Short & Let Winners Run.
It takes tremendous humility to navigate markets successfully. There can be no such thing as hubris when investments do not go how you want them. Investors plagued with big egos cannot admit mistakes, or they believe they’re the most significant stock pickers who ever lived. To survive in markets, one must avoid overconfidence.
Rule #2: Investing Without Specific End Goals Is A Big Mistake.
Before investing, you should already know the answer to the following two questions:
At what price will I sell or take profits, if I’m correct?
Where will I sell it if I am wrong?
Hope and greed are not investment processes.
Rule #3: Emotional & Cognitive Biases Are Not Part Of The Process.
If your investment (and financial) decisions start with:
I feel that
My friend told me
I heard
I hope
You are setting yourself up for a bad experience.
Rule #4: Follow The Trend.
“80% of portfolio performance is determined by the underlying trend. “
Rule #5: Don’t Turn A Profit Into A Loss.
Investing is about creating returns over time. If you don’t harvest gains and allow them to turn into a loss, you have started a “financial rinse cycle.”
Most importantly, “getting back to even” is not an investment strategy.
Rule #6: Odds Of Success Improve Greatly When Technical Analysis Supports Fundamental Analysis.
The market, for a long-time, can ignore fundamentals. As John Maynard Keynes once said:
“The stock market can remain irrational longer than you can remain solvent. “
Applying a technical overly to determine the “when” to invest can significantly improve the return and control the capital risk of the “what” fundamental analysis uncovers.
Rule #7: In Bull Markets, You Should Be “Long.” In Bear Markets – “Neutral” Or “Short.”
Investing against the market’s major “trend” is generally a fruitless and frustrating effort. During secular bull markets – remain invested in risk assets like stocks or initiate an ongoing process of trimming winners.
During bear markets, investors can reduce risk asset holdings to their target asset allocations and build cash. An attempt to buy dips believing you’ve discovered the bottom or “stocks can’t go any lower” generally doesn’t work out well.
Rule #8: Invest First With Risk In Mind, Not Returns.
Investors focusing on risk first are less likely to fall prey to greed. We tend to focus on the potential return on investment and treat the risk taken to achieve it as an afterthought.
Responsible portfolio management aims to grow money over the long term to reach specific financial milestones and consider the risk taken to achieve those goals. Managing to prevent significant drawdowns in portfolios means giving up SOME upside to prevent the capture of MOST of the downside. While portfolios may return to even after a catastrophic loss, the precious TIME lost while “getting back to even” can never be regained.
Rule #9: The Goal Of Portfolio Management Is A 70% Success Rate.
Think about it – Major League batters go to the “Hall Of Fame” with a 40% success rate at the plate.
Portfolio management is not about ALWAYS being right. It is about consistently getting “on base” that wins the long game. There isn’t a strategy, discipline, or style that will work 100% of the time.
Once you understand that, the other 8-rules above become much simpler to incorporate,
As an investor, stepping away from your “emotions” momentarily is most important. Look objectively at the market around you. Is it currently dominated by “greed” or “fear?” Your long-term returns will depend much on how you answer that question and manage the inherent risk.
“The investor’s chief problem – and even his worst enemy – is likely to be himself.” – Benjamin Graham
Losing a loved one is never easy, and the legal steps that follow can add even more stress to an already difficult time.
For years, families in Vancouver (and Canada in general) have struggled with a complex probate process—filled with paperwork and legal challenges.
Thankfully, recent changes to Canada’s probate laws aim to make this process simpler and easier to navigate.
Let’s unearth how these updates can simplify the process for you and your family.
What is probate?
Probate might sound complicated, but it’s simply the legal process of settling someone’s estate after death.
Here’s how it works.
Validating the will. The court checks if the will is legal and valid.
Appointing an executor. If named in the will, the executor manages the estate. If not, the court appoints someone.
Settling debts and taxes. The executor (and you) pays debts and taxes before anything can be given.
Distributing the estate. Once everything is settled, the executor distributes the remaining assets according to the will or legal rules.
Probate ensures everything is done by the book, giving you peace of mind during a difficult time.
Recent Changes in Canadian Probate Laws
Several updates to probate law in the country are making the process smoother for you and your family.
Here’s a closer look at the fundamental changes that are making a real difference.
1) Virtual witnessing of wills
Now permanent in many provinces, including British Columbia, wills can be signed and witnessed remotely through video calls.
Such a change makes estate planning more accessible, especially for those in remote areas or with limited mobility.
2) Simplified process for small estates
Smaller estates, like those under 25,000 CAD in BC, now have a faster, simplified probate process.
Fewer forms and legal steps mean less hassle for families handling modest estates.
3) Substantial compliance for wills
Courts can now approve wills with minor errors if they reflect the person’s true intentions.
This update prevents unnecessary legal challenges and ensures the deceased’s wishes are respected.
These changes help make probate less stressful and more efficient for you and other families across Canada.
The Probate Process and You: The Role of a Probate Lawyer
(Image: Freepik.com)
Working with a probate lawyer in Vancouver can significantly simplify the probate process, especially given the city’s complex legal landscape.
Here’s how they can help.
Navigating the legal process
Probate lawyers ensure all legal steps are followed, preventing costly mistakes and ensuring the estate is managed properly.
Handling paperwork and deadlines
They manage all the paperwork and court deadlines, taking the burden off of you during this difficult time.
Resolving disputes
If conflicts arise, probate lawyers resolve them, avoiding legal battles.
Providing you peace of mind
With a probate lawyer’s expertise, you can trust that the estate is being handled efficiently and according to the law.
With a skilled probate lawyer, you can ensure the entire process is smooth and stress-free.
Why These Changes Matter
The updates to probate law make a big difference for Canadian families. Here’s why.
Less stress for you. Simplified processes mean you can focus on grieving, not paperwork.
Faster estate settlements. Estates are settled more quickly, so beneficiaries don’t face long delays.
Fewer disputes. Courts can now honor will with minor errors, reducing family conflicts.
Accessible for everyone. Virtual witnessing and easier rules for small estates make probate more accessible for everyone, no matter where you live.
With these changes, probate becomes smoother and more manageable for you and your family.
How to Prepare for the Probate Process
Even with the recent changes, being prepared makes probate smoother. Here are a few steps to help you prepare.
Create a will. Ensure a valid will is in place to avoid complications.
Choose an executor. Pick someone responsible for managing the estate and discuss their role with them.
Organize documents. Keep key financial and legal documents in one place for easy access.
Talk to your family. Have open conversations with your family to prevent future misunderstandings.
Get legal advice. Consult with a probate lawyer to ensure everything is legally sound and up-to-date.
These simple steps make the probate process easier for everyone involved.
Wrapping Up: Making Probate Easier in Vancouver
Recent updates in probate law are simplifying the process for families, from virtual witnessing to easier estate rules. These reforms are designed to ease the burden, helping you focus on what matters—grieving and respecting your dead loved ones’ final wishes.
Despite these changes, it’s best to consult a probate lawyer to ensure you can manage everything properly. Remember, they’re here to help you during this difficult time.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets climbed to their best week of the year.
“It’s been almost a complete opposite or retracement of what we saw last week,” said Philip Petursson, chief investment strategist at IG Wealth Management.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
While last week saw a “healthy” pullback on weaker economic data, this week investors appeared to be buying the dip and hoping the central bank “comes to the rescue,” said Petursson.
Next week, the U.S. Federal Reserve is widely expected to cut its key interest rate for the first time in several years after it significantly hiked it to fight inflation.
But the magnitude of that first cut has been the subject of debate, and the market appears split on whether the cut will be a quarter of a percentage point or a larger half-point reduction.
Petursson thinks it’s clear the smaller cut is coming. Economic data recently hasn’t been great, but it hasn’t been that bad either, he said — and inflation may have come down significantly, but it’s not defeated just yet.
“I think they’re going to be very steady,” he said, with one small cut at each of their three decisions scheduled for the rest of 2024, and more into 2025.
“I don’t think there’s a sense of urgency on the part of the Fed that they have to do something immediately.
A larger cut could also send the wrong message to the markets, added Petursson: that the Fed made a mistake in waiting this long to cut, or that it’s seeing concerning signs in the economy.
It would also be “counter to what they’ve signaled,” he said.
More important than the cut — other than the new tone it sets — will be what Fed chair Jerome Powell has to say, according to Petursson.
“That’s going to be more important than the size of the cut itself,” he said.
In Canada, where the central bank has already cut three times, Petursson expects two more before the year is through.
“Here, the labour situation is worse than what we see in the United States,” he said.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Sept. 13, 2024.
