Happy New Year and Welcome to the New Decade!

I am writing to you today with regards to recent market developments, but more particularly the coronavirus. After ending 2019 on such a high note, I felt that the current market situation warranted some general perspective on global events.

Throughout our careers, Brendan and I have witnessed many world issues that have caused short term disturbances in market conditions. Here are the most notable that have occurred in the past 25 years:

1996                       Asian financial and currency crisis

1999                      Y2K – all computers globally were going to fail.

2000                     Beginning of the tech bubble crash.

2001                      9-11 and the tragic loss of life

2002                     Beginning of recession and the US/Iraq war.

2003                     Worldcom bankruptcy. Enron fraud.

2007                     Apple IPhone launch and the beginning of the end for Blackberry phones.

2008                     Global Financial crisis and market crash

2009                     GM declares bankruptcy. Chrysler declares bankruptcy.

2011                       Japan Tsunamai, nuclear power plan disaster at Fukushima

2011                       United States credit rating is downgraded and is no longer triple A.

2015                       Chinese Stock Market crashes.

2016                       England votes to leave the European Union.

2020                      Coronavirus

As a result of these various events, global markets reacted swiftly creating short term periods of nervousness and uncertainty with our clients. That’s what periods of declines do, they cause fear and panic, which can result in clients doubting their path and their financial future.

One of my most favourite quotes from Mr. Warren Buffett is;

“to invest successfully over a lifetime, does not require a stratospheric IQ, inside information, or unusual business insights. What is required is a sound intellectual framework for making decisions and the ability to not allow emotions to corrode the framework.’

While we do not want to minimize the devastation to life that is being caused by the coronavirus nor its short term impact to the global economy, our role as Investment professionals is to look over the valley and take advantage of the inefficiencies during periods of market uncertainty. Opportunities are being created for the patient, long-term investors who has control over their emotions.

As of the date of writing, there are approximately 87,000 confirmed cases of coronavirus globally, sadly resulting in 2,700 known deaths. If we use history as a guide, the rate of change in the number of people getting the virus should begin to decline in the weeks ahead. To put these numbers into perspective, so far in the 2019/2020 season, the flu has infected over 19 million people globally resulting in over 10,000 deaths in the United States alone. Interestingly enough, no one talks about the flu as a pandemic or a disaster or a detriment to the global economy. Is coronavirus any different?

Today I read an article in CNBC, where the author concluded with the idea that the coronavirus is potentially threatening to end the worldwide travel boom. This type of doomsday news reporting is typical during these times as journalists extrapolate current events into worst case scenarios. I would rather doubt that the future of air travel is threatened by this virus.

Our recent discussions with global portfolio managers conclude with the consensus that the coronavirus will be contained sometime during the next several months. There is no doubt that near term global economic growth will be penalized big time as global supply chains are affected and are slow to heal. However, economic demand will not disappear, but will be rather postponed until the latter part of the year.

Investment Conclusion:

We maintain a long-term view of investments. We recognize that we live in a volatile, uncertain and complex world that can be terrifying from time to time. However, we are steadfast in our belief that control of emotions alongside of a plan and properly allocated investment accounts will result in superior long-term returns that far outweigh short term risks.

The engines for accelerating global growth are primed and ready to go once the world gets its arms around the coronavirus, and new trade deals kick in. Current markets are likely to result in a new round of central bank interest rate reductions, reducing the cost of capital for businesses and consumers alike. The next phase of global growth is ahead as well as the next ‘up-leg’ for the stock markets.

Much like every other crisis in the past 25 years, this shall be a buying opportunity and not a time to panic.

This too shall pass.

As always, thank you for your business, your trust and your continued support of Brendan, Erin and I.

Yours truly,

Jamie C. Hodgins, CIM FMA FCSI

Senior investment Advisor , Branch Manager