Dear valued client,
U.S. markets ticked up slightly this week as inflation data came in cooler than expected. The CPI (Consumer Price Index) came in at 5% in March (compared to 6% in Feb. and 6.4% in Jan.), its lowest level in nearly two years. Given the strong labor market and inflation still running well-above the Fed’s 2% target, experts expect another interest rate increase at some point this year.
Canadian markets posted a strong performance this week (1.89%) as the Bank of Canada decided, for a second consecutive time, to hold its interest rate steady at 4.5% as previous hikes filter through the economy (mortgage rates especially).
U.S. bank earnings season started today as JP Morgan’s stock rose 7% after it posted a 52% increase in first-quarter profits ($12.62 B). After much turmoil in the banking system over the past month or so, CEO Jamie Dimon said the bank will continue to act as a “pillar of strength” to restore the public’s trust.
I’d like to reiterate the perspective and mindset required to be a successful investor by sharing an exchange Warren Buffett had with a reporter a few weeks ago. Buffett, who’s been investing for nearly six decades and regarded as one of the best investors in modern history had this to say when the reporter asked if he’s nervous about the current state of the market;
“I never know what markets are going to do – I only know what markets are going to do over a long period of time, they’re going to go up. But nobody knows what’s going to happen over the next day, week, month, or year even – and I never felt that was important. Anytime the market goes down as far as I’m concerned I like it because I’m a lifelong investor – it’s good news just like when whatever else you buy over your lifetime goes down in price is good news. The only person who can cause you to get bad results investing in the market is yourself.”
Nobody can predict what the stock market is going to do in the short term. The media thrives on the seduction of pessimism; relentlessly predicting the next recession or catastrophe. Successful life-long investors focus on the continual buying of profitable assets that will grow and compound over time. Patience is the magic ingredient.
Have a terrific weekend,
PW
