{"id":785,"date":"2019-08-07T18:00:31","date_gmt":"2019-08-08T01:00:31","guid":{"rendered":"https:\/\/chaltenadvisors.com\/blog\/?p=785"},"modified":"2019-08-07T18:00:31","modified_gmt":"2019-08-08T01:00:31","slug":"chalten-investment-review-q2-2019","status":"publish","type":"post","link":"https:\/\/chaltenadvisors.ca\/blog\/chalten-investment-review-q2-2019\/","title":{"rendered":"Chalten Investment Review – Q2 2019"},"content":{"rendered":"

Global stock and bond market returns were generally positive across the three month period however it was by no means a straight line from the beginning to the end of the quarter.\u00a0 In last quarter\u2019s review we highlighted that the investment environment was characterized by central banks appearing more accommodative, by an easing of international trade tensions and by rising markets — the opposite of what we saw in Q4 of 2018.\u00a0 Q2 demonstrated that the market is still sensitive to trade and monetary policy issues.\u00a0 While April delivered more of the positive return pattern we enjoyed in Q1, May brought a sharp reversal which seemed to coincide with a return of fears over trade and central bank policy.\u00a0 Perhaps the old adage, \u201cSell in May and go away,\u201d would have actually worked this year (at least if you had sold at the beginning of May!).\u00a0 Those fears seemed to subside in June and global markets rebounded over the final month of the quarter.\u00a0 <\/em><\/p>\n

Whatever the reason for the month-to-month volatility last quarter and whatever drives performance next quarter, it is a good reminder that observing and reacting to shorter term market returns doesn\u2019t always reflect what we expect over the long run as investors and certainly can increase anxiety levels.\u00a0 Actual stock market returns can be messy over one, three, five and even ten year periods relative to what we expect, but month-to-month, it seems anything can happen!\u00a0 Volatility is a necessary part of investing and the key to success over the long run is not trying to avoid market volatility and adversity but managing our behaviour through it.\u00a0 Behaviour management is easier said than done but is helped considerably by having an asset allocation that is suitable for your risk tolerance and financial goals.\u00a0 <\/em><\/p>\n

Q2 Market Review <\/u><\/em><\/p>\n

The Canadian economy seemed to jump back to growth mode in Q2 however the Bank of Canada has again decided not to further increase its benchmark interest rate, keeping it steady at 1.75% where it\u2019s been since the Bank last raised rates in October of 2018.\u00a0 Nonetheless, the Canadian dollar continued to strengthen against the US dollar over the quarter which again was negative for Canadian investors\u2019 US stock investments. \u00a0Government bond yields fell globally as prices rose.\u00a0 US economic growth and unemployment remained relatively stable over the quarter and the Federal Reserve decided to hold steady on interest rates there too.\u00a0 \u00a0International developed markets performed positively while emerging markets performance was mixed with the Chinese market underperforming both developed and other emerging markets.\u00a0\u00a0 Small stocks with low relative prices (value stocks) continued to underperform large growth stocks.\u00a0 The evidence shows that over time small value stocks outperform large growth stocks but the reverse situation can occur over shorter time periods and, as we\u2019ve seen recently, can persist.\u00a0 <\/em><\/p>\n