April HopeFS Newsletter

I hope our April newsletter finds you and your family healthy and happy. The early spring has been nice to see and the golf courses look wonderful.

Fortunately, March was a positive month for our portfolios and April seems to be cooperating as well. I would like to quote from our January 2016 newsletter:

"The majority of our returns have been coming from outside Canada in the last few years. I will say, however, that Canadian markets are now looking a little under priced and I can imagine Canadian equities outperforming international equities sometime in the future. Having said that, it could take a number of years before the markets agree with me!"

It is fortunate for me that Canadian equities were able to rebound as quickly as they have. We have double digit returns in the last three months for some of our Canadian funds. Please do not ask me to venture into predicting the future as I believe that is a fools game. However, it is nice to see that markets agreed with me fairly quickly.

The TSX is down about 7.16% over the last 12 months. The S&P 500 (USA) is up .80% over the last 12 months but when we convert that back to our Canadian dollar our return becomes positive 4.02% Europe had a loss so far over the last year of 6.40% this past year. Asian markets have a loss now over a year of 5.84%. These returns are all expressed in Canadian dollars and therefore include our gains or losses from a changing Canadian Dollar. Although our one year rates of return are either slightly negative or a small positive I do see some optimism for 2016. (source: Vanguard Canada) Fortunately, our Canadian holdings have fared much, much, better than the TSX in general. Our Canadian managers have been surely earning their fees as we exceed the TSX performance on a one, three, and five year basis in most cases.

How Much House Can I Afford? or Beware Bankers in Sheep's Clothing

We should all remind ourselves that asking how much house can I afford to a banker is tantamount to asking the wolf to watch your sheep for the night.

When the bank calculates the largest monthly payment you could possibly handle. They are actually calculating the odds that they can suck $3,750 per month from your account each month and not quite crush your will to live. They have calculated the probabilities and are confident you will keep going to work, get a second job, do whatever you can at this level and keep making the payments to them so they make the maximum amount of money. Monthly payments bigger than that amount will result in you just giving up and turning the house back to them at some point, any lower, and they are not maximizing their profit.

You might think the bank is considering: Will my kids be able to play hockey, will we be able to save money in RESP's, retire at 60, have a second child, take ONE Caribbean cruise? The bank frankly couldn't care less about that. You have to know your priorities, once you are clear on what matters to you in life, the money decisions start getting easier. Beware wolves in sheep's clothing