Hey everyone, I can’t believe that it’s the end of summer already. We had such a great summer full of great adventures, getaways and some much needed family time. More importantly, my wife and I finally had a break from the kids with a night away in Niagara Falls.
Now we’re into the whole back to school thing and out of vacation mode.
Meanwhile, the crazy shit storm that is the 24-hour news cycle has been working overtime to deliver every depressing piece of news out there. Mass shootings, trade wars, Recession talk and of course to top it off the Rain Forest is burning down! I want to go back to sippin margaritas!
Not only does this stuff mess with our heads, it also messes with our finances. Keep reading to see what I’ve been doing and some ideas on what you can do to improve your finances.
Now for my usual disclaimer: this post contains affiliate links. As an affiliate of Amazon, Tangerine, and Questrade this blog may receive a small commission for sales.
More Market Madness
The Canadian Stock market and the US market are sinking fast. Investors are finally waking up to the realization that Trump’s Trade War really isn’t great for the global economy and is not likely to be resolved for some time now. Add a long overdue recession into the mix and it spells disaster for investors.
Both the US and China are trying hard to pressure each other into a trade deal. The more threats Trump makes, the more the Chinese dig in and refuse to be bullied. This whole mess will definitely come back to bite Trump in 2020.
I’m betting Americans will kick his ass out once they see the damage he’s done to their economy. After all, most people vote with their wallets, not their conscience.
Anyway, that’s my take on the whole trade war thing.
What Does This Mean for Investors
All this market turmoil is definitely killing my net worth numbers. But then again, I know that long term investing is a rocky road and progress almost never follows a solid upward trajectory.
Now is a pretty scary time to be an investor and I think we might see some panic selling and margin calls like we did at the end of 2018.
But I’m not letting any of this stuff get to me and if you’re investing for the long term you shouldn’t either. Sure our investments will take a hit in the short term, but in the long run things will be just fine.
Whenever there’s a recession or even talk of a recession everyone acts like it’s the end of the world. It never is and things turn out just fine on the other side. That is of course if you don’t panic and sell!
Get Ready to Buy the Bargains
I’m taking the opposite approach to all of this and I’m buying more shares, particularly in the hard hit banking sector. Sure the banks might have a few bad quarters but you get a good dividend that will grow and 5 years from now these prices will look like bargains. Especially if their share prices fall more. Most banks are yielding above 4% and some are around 5.5%-6%. It seems overdone to me, but what do I know…
If you’re investing for income like I am then these market pullbacks are great opportunities to pick up extra income for cheap.
Cash for Nervous Nellies
If you’re nervous and want to play it safe you can always consider parking your cash in a savings account. The good ones are paying around 1 or 2 percent. Some online banks are paying above 2%. For more info on this check out my EQ Bank Savings Plus Account Review.
That’s not much at all but at least you won’t lose your shirt in the market. Maybe if the market falls further you could deploy that cash at an opportune time.
The One Thing We Should All Do…
The one thing I will say is important to do when we’re headed for rough economic times is to pay off our debts. Credit cards, line of credits, even mortgages can be a huge liability. So why take a chance? Pay this stuff off before it comes back to bite you.
Cheers! And have a great weekend everyone!
In case you’re wondering here are some financial services I use:
For my Daily banking and no-fee cash back credit card I use Tangerine. Curious? Check out my Tangerine vs Simplii Financial review and the Tangerine Money Back Credit Card Review.
For investing I use a combination of TD Waterhouse (for legacy investments) and Questrade (low cost stock purchases and free ETF purchases). If you haven’t done so already, check out my Questrade Review to see why it’s the best deal around.
Bignick
Sunday 25th of August 2019
It's interesting that you expect Trump to bow down to China so people feel better about their stock portfolios. When are we as a free world going to hold China accountable for unfair trade, stealing intellectual property, and horrible human rights? What is Canada doing about this?
I hate seeing my portfolio dropz but this has been brewing for a long time.
GenXinvestor
Sunday 25th of August 2019
Great comment. I don't think Trump will bow down to China to save my stock portfolio or anyone else's for that matter. I do think the trade war will be very bad for the US (and global) economy. Going into an election year with a bad economy hasn't been a recipe for successful reelection in the past. So I think Trump will either cut a bad trade deal or, worse, settle for trade assurances from China to try to save face and keep the US economy from teetering into recession. All of that will be to improve his chances of reelection. Let's not forget Trump has a shitty track record of success on foreign policy (ie. North Korea, Iran, weakening NATO and the Asian alliance). I mean it's not like Trump has some sort of coherent and well planned strategy to coerce the Chinese. All he's doing is trying to get concessions by threatening tariffs on their goods and threatening to list Huawei as a national security threat.
The Canadian Government has for years lectured the Chinese on human rights abuses, but it's not like China cares what Canada has to say. Canada-China relations are at their lowest point ever, with trade and investment also at their lowest point. 2 Canadians (a former diplomat and a businessman) are languishing in a Chinese prison right now on false charges because Canadian authorities detained a high ranking Huawei official at the request of the FBI. Last I heard, the chinese government won't even talk our government. Anyone else have something to add to this?