Lexicon Financial Group Weekly Update — November 13, 2024
“Always give without remembering and always receive without forgetting.”
From the desk of Craig Swistun, CIM, MFA-P, Portfolio Manager, Raymond James Investment Counsel, and Wayne Hendry, Client Relationship Manager, Raymond James Investment Counsel
Looking Around
In April of next year, I’ve been invited to give a talk at the National Conference for the Canadian Association of Gift Planners. It’s an ambitious presentation – it should be, after all I submitted the proposal.
Essentially, it digs a little bit deeper into particularly important parts of what we do. Sure, we manage assets entrusted to us in a professional, institutional manner, enabling us to construct portfolios that match each client’s overall risk tolerance. But a big part of our approach is to help clients look forward and look back. Let me explain.
We believe that all clients benefit from some measure of financial planning. Starting with where you are today, a financial plan by design needs to look forward.
I’ve often said that a financial plan needs to begin by addressing three key questions:
What happens if you live too long?
What happens if you die too soon?
What happens if you get sick?
These questions force you and us to think forward, to imagine a world where each of these scenarios plays out.
If you live too long, you run the risk of outliving your money or having to sacrifice your lifestyle. If you die too soon, it could have financial implications for your family. If you get sick, you may not be able to work and may have medical expenses not previously planned for.
But this is just the beginning. What are your short-, medium-, and long-term goals? Do you have any? If not, why not? These are deeper issues that numbers alone can’t solve.
In this way, a proper financial plan needs to set your sights on the future. It’s a series of “what if” questions. The financial implications change based on your answers, and the numbers follow suit. “What impact would buying a new vehicle have on our ability to live a comfortable lifestyle in retirement?” is a great start but can’t be answered until we understand what “comfortable” means in this context and what your unique plans are for “retirement.”
A written plan is good, but it needs to go beyond the data, which requires you to go below the surface questions and get to what matters most. I’m going to call this a projective approach.
When it comes to charitable giving (financially or with volunteer opportunities), we encourage people to take a reflective approach. That’s because your past often does a better job of helping you determine the causes that matter most to you because you have actual lived experience.
Think back to those organisations that helped shape you and make you the person you are today. There are obviously schools, clubs, sports teams, and arts organisations. But what about the other nonprofits and charities that you have come in contact with over the course of your life? Did you start painting or drawing because you were inspired by a visit to an art gallery (nonprofit)? Did you volunteer in your community because you were connected through your church, mosque, or synagogue (charity)? Did you start a business because you met an entrepreneur at a community event (nonprofit)?
A quick note: I’ve been going through this exercise myself, in preparation for my presentation in April. It isn’t easy, and it brings up a lot of good and sometimes not-so-good memories. But this intentional act of reflection has reminded me that who I have become as a person is a function of my experiences, which have been shaped by so many. Recording them makes them real and changes the way I look at my own charitable activities.
For example, a few years ago, my father died of leukemia. During his illness, he was given several units of blood to help stabilize him during his treatment. It wasn’t until reflection that I remembered this. So now, my sister and I are competing to each donate twice the amount of blood that my father was given, thereby ensuring that some other family can get the life-saving treatment they need. I guess this is what is called a positive sibling rivalry. My sister doesn’t know this yet; she has a big head start but I still have a chance to catch up.
What’s the point of all of this? Well, you may already support causes that are important to you, but I can guarantee you that there are causes that were equally, if not more, important at one time in your life. Take stock of those. Maybe it will change the way you look at your financial and volunteer contributions. We are ready to help you do this. If you’d like to walk through this exercise with us, please let us know. It’s valuable.
Read and Watch
Want deeper insight into topics in your Weekly Update? Then, read and/or right click:
Video: How long will Europe's economy stay weak? - DW News
Germany’s economy is in trouble. The government’s collapse and Trump’s return bring more risk
China is trying to fix its economy - Trump could derail those plans - BBC
Looking Back
Any uncertainty that the markets had about the elections in the United States (U.S.) was cleared by what was a decisive outcome for the Republican party and Donald Trump. Ahead of these elections, bond and equity market volatility had been rising, which has been the historical pattern for election years. As soon as the election uncertainty was removed, the relief rally ensued. One word of caution here is that this rally may fade in the coming days. History, however, reveals that more gains are often the norm over the longer term. Since 1930, there have been 23 elections prior to the one that just occurred, with equities rising on the day after, in nine instances. In all cases, the S&P 500 was higher 10 days later and remained higher three months afterward in seven cases. (1)
Source: Morningstar Direct and Edward Jones
Given this, how did major markets in North America do last week? Well, they all ended up last week. The Toronto Stock Exchange's S&P/TSX composite index (TSX) did give back some of its gains on Friday, as prices for base metals and oil fell. The Canada's materials sector fell 1.9 per cent, as gold prices logged their steepest weekly decline in over five months, pressured by a stronger dollar and uncertainty about Trump's victory's impact on the U.S. rate cuts in the coming months. The current consensus is that there is a 60 per cent chance of a half a per cent cut at the Bank of Canada's December policy meeting. This is slightly below the 64 per cent chance previously. (2)
U.S. markets cruised to the close of their best week in a year. The S&P 500 posted its biggest weekly gain since early November 2023. The Dow Jones Industrial Average and the Nasdaq composite ended the week slightly up. The Trump presidential election win and the cut in interest rates of a quarter-point by the Fed helped to make things easier for the economy. Long-term Treasury yields eased in the bond market. (3)
European markets closed lower as investors digested corporate results and interest rate cuts from the U.S. Federal Reserve and Bank of England. The pan-European Stoxx 600 ended the week lower, with most sectors and major burses closing in the red. The losses in Europe come as market participants continue to assess political upheaval in Germany and the impact of President-elect Donald Trump’s historic victory.
Germany’s DAX index closed 0.8 per cent lower, after Chancellor Olaf Scholz sacked Finance Minister Christian Lindner on Wednesday evening and appointed his successor on Thursday. This move, which brought a dramatic end to the country’s three-way coalition government, raises the possibility of an immediate no-confidence vote and new elections. Scholz has said he does not want to call a vote of confidence before mid-January.
Elsewhere, Asia-Pacific markets ended the week mixed. In a highly anticipated announcement, China said the central government would allocate an additional 6 trillion yuan ($840 billion) to local governments to help tackle hidden debt issues. (4)
The opinions expressed are those of Craig Swistun and not necessarily those of Raymond James Investment Counsel which is a subsidiary of Raymond James Ltd. Statistics and factual data and other information presented are from sources believed to be reliable, but their accuracy cannot be guaranteed. It is furnished on the basis and understanding that Raymond James is to be under no liability whatsoever in respect thereof. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Raymond James advisors are not tax advisors, and we recommend that clients seek independent advice from a professional advisor on tax-related matters.
Weekly Market Wrap, Angelo Kourkafas, Edward Jones, November 8, 2024
Toronto stocks fall as mining, energy weigh; closes higher for the week, Nikhil Sharma and Nivedita Balu, Reuters, November 8, 2024
How major US stock indexes fared Friday, 11/8/2024, Associated Press, November 8, 2024
Europe markets end the week lower with mining stocks leading losses, Karen Gilchrist and Sam Meredith, CNBC, November 8, 2024
SUBSCRIBE
If you’d like to automatically receive the weekly Market Update by email, enter your email address in the box below.
We respect your privacy, and you can always remove yourself from the mailing at any time.
Looking to Learn?
If you want to know more about some of the topics we wrote about this week, just click on the links below:
Video: The way we think about charity is dead wrong – Dan Pallotta, activist and fundraiser
Understanding the Differences: Non-Profits vs. Charities in Canada
Fewer Canadians are giving to charity, and that's a problem for everyone
American Generosity Squeezed by Economic Uncertainty, According to Wells Fargo Study