Back to life, back to reality

By David Lisbona, August 15th, 2012

There was such a groundswell clamoring for my return to these pages that roads started buckling throughout Montreal’s downtown core. OK, perhaps that had more to do with the one hundred year old water mains that continue to undergo patchwork repairs of which even the European Union would be envious. Perhaps you didn’t even realize I was gone, but here I am, back where I belong.
During my time away, in addition to working on building my business, I endeavoured to truly understand our financial landscape. I came to various revelations about myself, about this industry and about your money.
Let me start by saying that it is easy to be discouraged by what is happening in the markets and within the walls of some global financial institutions, and not to mention a European Union whose profligate members risk undermining an entire global monetary system.
Do I want to be a downer? No. There are certain realities that we have had to face over the past several years. We are now experiencing the hangover of our previous excesses whether it be from the deficit spending which began in earnest in the 80’s, to the reliance on the nanny state to address our every need from cradle to grave since then and now ourcollective obstinance in modifying any of our government entitlements. This took many years to build and inevitably will take many years to correct. It is clear that my generation has not had to make the same hard financial choices as the previous one. We are an immediately gratified group that is now facing some difficult fiscal realities.
So where does that leave your investment options? I continue to believe, and the evidence appears to bear this out, that large company equities are the best long-term option for you, especially those that pay strong and growing dividends. Are there growth stories out there? Of course there are, but if your goal is to constantly swing for the fences, I believe in markets like these, you will likely strike out. Take it from a reformed stockaholic, if you are trading constantly and watching stock quotes all day, whether you work in this industry or not, then you are a trader and you need to decide if the money upon which you are relying for your retirement is best kept in the hands of a trader. I’m not necessarily saying that you need a professional to manage your portfolio, if you have the discipline, the time and the resources, then I think you can be successful. But too few of us have those things to manage investments effectively and when the tide goes out like it does far too often in a lousy market like this; one tends to see who isn’t wearing any clothes. When the exchanges go up, everyone’s a genius, when they go down, it will always be the fault of the market. This is a refrain that I hear constantly.
Are better times on the horizon? I’m a reversion back to the mean type of guy, The TSX is down a full 18% since my first day at this firm in April 2011, surely, this can’t last forever. If you stick to a discipline, however, it really shouldn’t matter, should it?
David Lisbona, B.C.L., LL.B., MBA, FMA is an investment advisor at RBC Dominion Securities, he can be reached at (514) 840-7130 or at david.lisbona@rbc.com