Weekend Reading: Market Recovery Edition

The TSX had been in a bit of a funk since June 1st 2015 when it closed above 15,000 for the last time. Canada’s major stock market index reached its depths this January 19th when it finished the day at 11,843 – a drop of 21 percent from that June 1st high. Both my RRSP and RESP portfolios suffered major losses, falling 6.4 percent in the month of January alone.

Since then the TSX has surged ahead and this week closed above 14,000 for the first time since mid-August.

TSX 2016 surge

My portfolios have mostly recovered from the rough start to the year – with my RRSP climbing by 6.23 percent in the last three months and my RESP up 6.55 percent over the same period.

It’s a reminder that investing is a long-term game and investors should not make decisions based on a lousy month or even a poor year of returns. We expect stock markets to return 8 percent a year over the very long term, however the path is not a steady march upwards but rather a journey filled with many peaks and valleys along the way.

This week’s recap:

On Monday I looked at three financial priorities that you need to address right now.

On Wednesday Marie continued her financial planning for couples series with a look at combining finances and establishing a budget.

And on Friday I offered some personal finances lessons by sharing these seven financial traps to avoid.

Over on the Lowest Rates blog I looked at the difference between financing a car loan through a bank vs. a car dealer.

Weekend Reading:

A great piece in Maclean’s about the anatomy of a housing bubble and why we repeatedly fall into the trap of inflating bubbles even though history shows they always end badly.

As Millennials get into real estate, the bank of mom and dad sees more withdrawals.

Here’s Rob Carrick and financial planner Shannon Lee Simmons discussing whether home ownership is a dying dream for Millennials:

Carrick also talked to a 27-year-old woman from Toronto who’s trying to get into the housing market but keeps coming up short in bidding wars and as prices continue to soar.

Desirae Odjick from the Half Banked blog does the math to see whether she can afford the average house in Ottawa.

Meanwhile in metro Vancouver it takes 23 years just to save for a down payment and the average monthly mortgage payment will set you back $3,555.

Forget the U.S. TV shows – this article says Canadian foreclosure homes are often no bargain.

Want to stay in your home forever – as most Boomers do? Be aware of the cost of home care.

Peace of mind or just another headache? Here are the pros and cons of putting your finances on auto pilot.

What should you pay for a child’s guitar (or any musical instrument)? Ron Lieber, author of The Opposite of Spoiled, weighs in with a surprising answer.

A reader writes personal finance expert Helaine Olen to complain about how much her husband spends on energy drinks.

Don’t deny your spouse small pleasures in the name of saving money! It breeds resentment, anger, and sneakiness. Controlling other people, after all, is an all-but-futile task. Do you want your husband going behind your back just to consume an energy drink?  

Money Boss J.D. Roth talks about the optimization trap and the belief that tiny tweaks will make more of a difference than they actually do.

This Millennial plans on retiring. Here’s how.

U.S. financial planning expert Michael Kitces explains why the empty nest transition is crucial for retirement success.

“The real key to retirement success may not be about saving early and often for the long term at all, and that instead a significant post-child-rearing-phase “catch up” sprint is the normal path to retirement success.”

Canada’s big banks are profit machines, but as they look ahead, they see disruptive technologies all around them. Adam Mayers on how discounters aim to ease big bank pain points.

Finally, an interesting interview with John Chen, the man who answered the call to save Blackberry.

Have a great weekend, everyone!

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  1. William Sims on May 29, 2016 at 5:56 am

    I was particularly interested in 2 of the above articles which to my eyes appear to have some contradictory information (not that that is unusual in areas related to economics).
    First, I must say that while I found the piece on Bubbles interesting, it left me feeling that I had learned very little except that bubbles are accompanied by ‘overvaluation’ of an asset, without a real definition of ‘overvaluation’. Thinking back to the U.S. housing bubble, I believe that one of the early symptoms was a spike in mortgage defaults or at least mortgages underwater.
    The second article of interest was the piece on Canadian foreclosures (http://www.theglobeandmail.com/report-on-business/forget-the-us-tv-shows-canadian-foreclosure-homes-are-often-no-bargain/article30158305/). It is stated in that article that:
    “Mr. Campbell also points out that foreclosures don’t make up a large portion of home sales in Canada. According to the Canadian Banking Association, the number of residential mortgages in arrears as of January was just 0.28 percent of total mortgages in Canada.”

    Of course, one might argue that this is a national statistic and does not apply to Vancouver or Toronto, but it does (to me) seem to add some doubt to the idea of a Canadian housing bubble.

  2. Keith Cowan on May 29, 2016 at 9:35 am

    Yes the problem with housing bubbles is that they are only proven in hindsight.

    They do create great fodder for writers though. It all supports the idea that you do not learn about market behaviour by reading opinion pieces!

    Most people that make money in the markets do not write about it.

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