Recent Market Activity and Historical Insights

Dear Clients,

Hoping you are all enjoying the summer. This past long weekend is always bittersweet.  It’s nice to have time off but we all know we’re headed down the final stretch of summer.  I was hoping to reach out regarding the launch of our new website, qsawealthmanagement.com.  It is weeks away from going live, we will update you all soon, but I felt it necessary to reflect on recent market activity. For almost two years, we’ve enjoyed a period of stability and growth in our investments. However, the past couple of weeks have been unsettling due to increased global market volatility. Here’s what you need to know in plain terms: 

1. Why the Volatility? 

There are a couple of main reasons for this sudden market fluctuation:

      •   Economic Concerns in the U.S.: Recent job data from July was weaker than expected, raising fears about a possible economic slowdown.

      •   Interest Rate Hikes in Japan: Japan’s central bank unexpectedly raised interest rates, causing the value of the yen to rise against the dollar, contributing to market volatility

2. Impact on Major Markets

       •   In Japan: The stock market experienced over a 12% drop in one day, a significant fluctuation not seen in decades. The very next day it rose over 10 %.

       •   Asian markets: Followed this trend with other major indexes also experiencing notable volatility.

      •   European and U.S. stock markets: have likewise seen significant fluctuations due to these global concerns.

3. Understanding Market Corrections

      •   Necessary Adjustments: It’s important to remember that periods of stability like we’ve had are not sustainable indefinitely. Volatility, though challenging, is a necessary part of healthy market cycles. They help to remove excesses and set a more stable foundation for future growth.

      •   Realistic Expectations: The high returns we’ve seen are exceptional and not sustainable over the long term. Markets naturally go through phases, and above-average returns are typically followed by adjustments. This is a normal part of the investment landscape.

      •   Muted Volatility: Recently, volatility has been relatively muted, which is abnormal and not sustainable. It is natural for markets to experience fluctuations.

4. Role of Professional Money Managers

 Successful investors understand that market volatility, while challenging, is part of investing. Here’s how our professional money managers are responding:

      •   Viewing This as an Opportunity: As counterintuitive as it may seem, our managers look forward to these periods. They see market volatility not as setbacks but as opportunities to generate long-term returns.

      •   Stay Calm and Avoid Impulsive Actions: Our managers remain calm and avoid selling off investments during volatile periods. They know that staying invested allows us to benefit from eventual recoveries.

      •   Identifying Opportunities: They are using this period to identify and take advantage of long-term opportunities, buying high-quality investments at lower prices.

      •   Portfolio Adjustments: Our managers are actively re-adjusting portfolios to capitalize on short-term declines, preparing for stronger long-term performance. It’s important to let them manage this period as they bring their expertise to optimize our investments.

      •   Staying Informed: They keep a close eye on market conditions and economic indicators, making informed decisions rather than reacting to short-term market noise. 

5. Likely Positive Outcomes

      •   Interest Rates May Finally Come Down: The recent market turmoil could lead central banks, particularly the Federal Reserve, to reconsider their stance on interest rates. Lower interest rates can stimulate economic growth and improve market conditions.

      •   Healthy Market Corrections: Corrections help to remove excesses and overvaluations from the market, setting a more sustainable foundation for future growth. This can lead to a healthier and more stable market in the long term.

      •   Opportunities for Savvy Investors: Volatile markets often provide opportunities to buy high-quality companies at lower prices. This can be a good time to invest in strong companies at a discount, setting the stage for potential gains when the market recovers.

6. Our Strategy Going Forward

      •   Monitoring the Situation: We are keeping a close eye on these developments and will continue to make informed decisions to protect and grow your investments.

      •   Keeping Composed: During times like this, it’s best to stay calm and avoid making any hasty decisions based on short-term market changes.

We understand that the recent market activity can be worrying, but rest assured, our focus remains on your financial well-being and achieving your long-term goals. If you have any questions or need further clarification, please feel free to contact us.

Sincerely, 

Steve Arial

Mutual funds, approved exempt market products and/or exchange traded funds are offered through Investia Financial Services Inc.

The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. This update was prepared by Steve Arial who is an Investment Funds Advisor at QSA Wealth Management, a registered trade name with Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia Financial Services Inc. The information contained in this presentation comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability.