Wealth Perspectives Q3 2022

It has been difficult to find much commentary that suggests positive developments in the financial news over recent times. Today’s worries have created significant jitters for many investors: high and persistent inflation, more aggressive tightening policies by central banks, and, more recently, the prospect of recession.

Fear and greed are said to be the underlying emotions of equity markets, and this year we have seen a rapid change in sentiment. Indeed, these emotions can drive short-term market behaviour, sometimes resulting in decision making that may not be in an investor’s long- term best interests.

How do you approach your own investing? Do you base your financial decisions on longer-term objectives or do shorter-term perspectives often prevail?

While the ongoing issues we are facing should not be trivialized, a bit of perspective may be warranted. Let’s not forget that we have come from a period in which record stimulus benefitted both the markets and economies. As such, a period of adjustment can be expected. Global growth was anticipated to slow in the post-pandemic world.

Keep in mind that anyone who forecasts a recession has a good chance of eventually being right. Economies, like the markets, are cyclical in nature. Yet, labour markets closer to home continue to be robust and household balance sheets suggest consumer resilience. While high inflation has been a challenge, it is not expected to be permanent.

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