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Managing Expectations and Important Aspect of Investing

Managing Expectations and Important Aspect of Investing

May 9, 2022

Most investment categories had disappointing returns during the first quarter of this year.

First a few details. We looked at seven different sectors. Four different stock markets, a global real estate index and two bond indexes. Six of the categories had declining values in the range of five to eight per cent for the quarter ending Mach 31.

The Canadian stock market as measured by the S&P/TSX composite index was the only index that posted a gain. It increased in value close to four per cent.

The question is what can we learn from these results?

In my opinion, we should not interpret this as something that should change the direction of our investing. Then I read an article in Investment Executive titled, “Canadians continue to sell foreign stocks: Stats Can.”

Investor expectations play a major role in how people react to short-term events and make changes with their long-term investment plans accordingly. I would caution against this because that often leads to disappointing results.

Yes, Canada was the top performing market but if this led to investors selling the stocks from other parts of the world, then respectfully I would disagree.

For the 10 years ending March 31, the average annual return of the Canadian stock index was nine per cent. The return of the US stock market index was just under 17 per cent. International developed market stocks index was just slightly lower than the return posted in Canada.

Canada’s recent stock market success was largely fuelled by the energy sector. That was facing pressure for environmental reasons then suddenly because of the war in Ukraine, energy prices soared.

We encourage you to take a long-term approach to investing and manage your expectations accordingly.

Peter Watson is registered with Aligned Capital Partners Inc. (ACPI) to provide investment advice. Investment products are provided by ACPI. ACPI is a member of the Investment Industry Regulatory Organization of Canada. The opinions expressed are those of the author and not necessarily those of ACPI. Watson provides wealth management services through Watson Investments. He can be reached at