TheAnswerIs.ca
Model Portfolio
TheAnswerIs.ca Inc. Model Portfolio Performance Update (Q2 2021)
TheAnswerIs.ca Inc. announces a total return for the Model Portfolio from inception October 26, 2016, to June 30, 2021 of 63.62.%.
The corresponding total return for the Toronto Stock Exchange (TSX), as represented by the ETF XIC, is 58.16%. TheAnswerIs.ca Model Portfolio return is higher than the TSX return due to its broader economic sector diversification.
The annualized return for the TheAnswerIs.ca Model Portfolio for the 4.68 years since inception is 11.09% per year.
The trailing 3-month total return for TheAnswerIs.ca Model Portfolio is 6.87%.
The trailing 12-month total return for TheAnswerIs.ca Model Portfolio is 32.33%.
Past returns are not indicative of future returns.
Global stock markets continue to rally from their March 2020 lows. Stock markets are now richly valued, but that does not mean they cannot continue to climb. Stocks markets can climb higher than they "should", and then fall farther than they "should". A wise long-term investor recognizes that short-term volatility is part of equity ownership and knows that even a short-term 30% drop in the stock market represents only a small blip on a graph of an investor with a 30 to 50 year investment horizon.
Investors need to remember that the Bear is sleeping now, and there is a 100% probability that the Bear will awaken at some point, and stock markets will again convulse downwards by 20-50%. Notwithstanding the March 2020 Bear market, one of the worst ever recorded in terms of speed, TheAnswerIs.ca Model Portfolio is averaging a return of just over 11% per year since inception, clearly illustrating that while an all-equity portfolio is extremely volatile, it also provides attractive longer-term returns.
The next time the Bear awakens, we know an investors best defense is to simply... “hibernate”, collect their dividends, and wait for the Bear to wander back into its cave. TheAnswerIs.ca Model Portfolio includes ETFs in the utilities and real estate sectors, which pay dividends every month, even during a downturn. Collecting dividends during a market downturn is like getting “paid to wait” for a portfolio to eventually recover.
The key to successfully investing for long-term growth, is to make sure any money invested in the stock market can be left untouched for a minimum of 10 years, and preferably much longer. Not selling into a stock market downturn will ensure that there is time for a portfolio to recover and provide potentially attractive long-term average equity returns. Five years before one slows down working, and begins to draw money from their portfolio, one should move a significant portion of their portfolio into fixed income.
Invest long-term and prosper.
