There was a high degree of fanfare this past week on the 10-year anniversary of the Lehman moment. For me, this was the defining moment when Congress and the world realized that the financial system was at risk. It stirs up some wild emotions for me personally. I was almost two years into living my dream of starting an investment counselling business and it was not going well to say the least. It was also about 18 months into Berman’s Call and it was difficult trying to help people navigate the worst financial crisis since the Great Depression.

Whether this is the longest bull market in history or not is far from understanding where we are in the market cycle. If you measure on a close-to-close basis, we have not seen a 20 per cent  correction since 2009, but measured on a peak to trough basis, we saw a 21.58 per cent correction from May 2, 2011 to Oct 4, 2011. If you measure from close to close, the decline was 19.47 per cent from April 29, 2011 to Oct. 3, 2011. And to say that the 2015-16 correction was not a bear market when U.S. small cap stocks fell 27.23 per cent from June 23, 2015 to Feb. 11, 2016 is not seeing the forest through the trees as they say. Some analysts are suggesting we could have years to run still in the bull because this is not the longest bull market. Others (like me), say we are probably in extra innings. Who do you believe and how do you play it?

Market (Total Return) 09-15-08 - Today 03-09-09 – Today (Ann.)
S&P 500   233% 424% (19.0%) 
S&P TSX  81% 179% (11.4%) 
DAX (Germany)   115% 228% (13.3%) 
 Hang Seng (Hong Kong)  80%  240% (13.7%)
Nikkei 225 (Japan)   167%  289% (15.3%)
 FTSE 100 (London) 102%  196% (12.1%) 


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Market (Total Return) 10-31-07 – Today (Ann.)
S&P 500  137% (8.3%) 
S&P TSX  51% (3.9%) 
 DAX (Germany)  51% (3.9%)
 Hang Seng (Hong Kong) 28% (2.3%) 
 Nikkei 225 (Japan)  68% (4.9%)
 FTSE 100 (London)  65% (4.7%)


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Where and when you invest globally is critical to your bottom-line returns. In this example, we are just looking at equity returns. I’ve said for years here on Berman’s Call that getting a low-cost, 100 per cent globally-diversified equity portfolio is what everyone should have. The truth is, very few investors can handle a 100 per cent equity-based portfolio because it will likely have the highest risks (volatility). Emotionally, almost no one can handle the ride because it’s not until the markets are down significantly that we are emotionally charged to SELL! And from what we have seen, selling at a low point will destroy your long-term returns.

What we can learn from looking at a studies like this is when you buy and what you buy matters a lot. Minimizing the downside risks are equally as important as capturing the upside. I’ve also long said that static portfolio mixes like 60:40 or 70:30 (Equity:Bond) are yesterday’s diversification story and won’t likely serve investors well in the future. The main reason I believe this is that bond yields are likely to stay very low for a long time and will not provide the same historical returns. And when inflation does take hold again, it could be devastating for both asset classes like we saw in the 1970s.

In our upcoming Berman’s Call tour, I will take you through the past decade of what worked and what did not. I will look at the next decade and the sectors that I think will offer higher than average returns (typically with a bit more risk). I will teach you how to build a diversified “All-Weather” portfolio using ETFs and ETF option strategies with all asset classes including commodities and currencies. The next market cycle will likely be a big challenge given that bond yields are already so low. A dynamic asset allocation portfolio should help you sleep a bit better no matter what happens. Why not have 100 per cent equity when it makes sense and why not have other asset class exposures when it does not. Here are the dates. 

Hamilton - Burlington, Tuesday October 9, 2018

Edmonton, Wednesday October 17, 2018

Calgary, Saturday October 20, 2018

Regina, Wednesday October 24, 2018

Winnipeg, Thursday October 25, 2018

Toronto - Etobicoke, Saturday November 3, 2018

Halifax, Wednesday November 7, 2018

Montreal - Laval, Thursday November 8, 2018 

Ottawa, Saturday November 10, 2018

London, Tuesday November 13, 2018

Toronto - Markham, Saturday November 24, 2018

Victoria, Wednesday November 28, 2018

Vancouver, Saturday December 1, 2018

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