3) What will be the strongest/weakest sectors?
I think that as the global economic recovery takes hold, you may see a rebound in demand for Canadian resources as countries like China and India continue to require more commodities for development and consumption. I also feel that the Canadian financial services, energy and the utilities sectors should strengthen as baby boomers continue to retire and look for tax efficient, reliable, income-producing securities. I think investors will need to closely monitor the portion of their accounts invested in the United States, due to a sluggish economic recovery, high debt levels and the current impact of a rising Canadian dollar.
4) What is the most important question I should ask before selecting an investment advisor?
How will you determine the level of investment risk that is suitable for my situation and how will you pick the investment products to use?
5) Where and how are you personally investing at the moment?
Canadian equities – financials, energy, utilities, basically companies that strive to pay dividends.
Steven Belchetz,
President & Chief Investment Officer
T.E. Wealth
Investment Counsellor, Atlantic Canada
1) Is this a good time to invest?
Determining whether now is the best time to invest is virtually impossible because such a determination ultimately is a market timing decision. At T.E. Wealth, we believe that without the benefit of hindsight, attempting to time the market is a risk that is unlikely to work in your favour. Most investors will save and invest their money for 30-40 years, accumulating funds during their working years and spending during their retirement years. As such, there really is no “right” time to invest and thus it is crucial to develop and formulate a long-term investment strategy that establishes the mix between stocks and bonds, as well as the allocation between Canada and the rest of the world. Over time, the plan may require adjustments as an investor goes through different phases of their life, but on balance, investors should follow their long-term plan and not let emotions get in the way. Once the plan is in place, we encourage investment according to the allocations outlined in the long-term strategy. If you are just starting or have a large amount to invest, then it is logical to set up a disciplined plan to gradually invest the money over the near term; a slower move toward your long-term target equity exposure may make sense if there are concerns about current equity market valuations or market volatility. Therefore, to summarize, there is really no bad time to invest for the long term and attempting to time the market tends to backfire more often than not.
2) How do you think the market will perform in 2010?
Over the course of 2010, I doubt that the market will continue to rally at the pace it did in 2009. More than likely, there will be a more gradual increase accompanied by continued volatility and short-term corrections as investors evaluate the success of the economic recovery.
3) What will be the strongest/weakest sectors?
One thing I have learned in more than 20 years of managing client assets is that determining which sectors will be strong and/or weak over the shorter term is extremely difficult. Therefore, I would encourage a diversified equity portfolio which has exposure to various sectors in order to prevent being caught with too much in a weak sector. An important point for Canadian investors is that this necessitates having more than just Canadian equities in their portfolios as the Canadian market is dominated by three sectors (Financials, Materials and Energy). In order to obtain exposure to additional sectors like Consumer Goods, Information Technology and Healthcare, investing outside Canada is a must.
4) What is the most important question I should ask before selecting an investment advisor?
The most important question to ask an advisor is about their long-term plan for managing your wealth so that you have an understanding of the investment approach and discipline that is supposed to help you reach your long-term goals. If you are comfortable that the advisor is following a disciplined (rather than ad-hoc) approach that makes sense over time, you will be much better off and better prepared to deal with tough times like those experienced in 2008. It is also important that you understand how your advisor is compensated, which will assist you in assessing their objectivity when managing your assets. At the end of the day, you want some assurance that they will act in your best interests rather than in their own best interests (from a compensation perspective).
