2011 in Review

It’s not easy to be an optimist after a year like 2011. Canadian stocks sank more than 8%, led by a 52% drop in information technology. Even Canadian bank stocks offered less of a safe haven than in years past. Around the world, 2011 was a year marked by natural disasters, debt and deficit problems, uprisings and protests. Time magazine asked in its December issue: “Is there a global tipping point for frustration?”

I believe there is. Things that are broken beg to get fixed, and challenges of any kind are often accompanied by opportunities. Here are my observations for the year ahead:

First, bleak points in history are not necessarily bad times to invest. The worst time to invest is often when investors are overly optimistic and asset prices are unjustifiably high. When there’s worry and negativity, stock prices generally reflect that sentiment. Today, I’m finding stocks of many high-quality companies selling at very attractive prices. The way I see it, global markets are offering investors an opportunity to upgrade the quality of their portfolios right now.

U.S. companies have been remarkably resilient. 

Despite a less-than-robust economy, and a host of other problems, U.S. companies continue to rebound. The S&P 500 was up 4.6% in 2011, and American corporate profits are at record highs. When you compare corporate earnings to what government bonds are yielding, it’s hard not to be optimistic about stocks.

Emerging markets are alive and well. Emerging markets have relatively little debt, access to capital like they’ve never had before, powerful technology and a rapidly growing middle class. That’s real growth potential. Many Canadian, U.S. and European companies that do business in emerging markets may also be well positioned, even if their local economies aren’t strong. It’s where a company does business, not where it’s based, that matters most.

Innovation and Growth

Innovative companies around the world are creating new products and solving the world’s problems. I think that’s what makes markets go up over time — it’s the effort of the individual companies solving problems. That’s a reason for optimism, as long as you’re patient.

The biggest risk right now could be over concentrating your portfolio. When we don’t know what’s going to happen, it’s often wise to invest in different types of securities. Many people end up owning too much of a “good” thing, whether bonds, cash or high dividend-paying stocks. My job is to make sure you stay properly diversified, even when the markets make you nervous. As part of your investment strategy, it's wise to check on your financial situation and any changes that may have occurred.

I can help. Let’s talk.

Patrick C. Nicol
image credit: istock

Nicol and Associates | How Can We Help?

When we ask someone what they do, there's usually more to the question. I think we are asking them what benefit they provide. In the financial industry, you could ask five people this question and get five very different answers.

After more than two decades in the financial industry, I know I can’t be everything to everyone. I also know that the only place to focus my efforts is to ensure my clients’ goals are firmly in mind at all times. When I first meet a prospect, I interview them as much as they interview me. I have a lot on the line, most of which is my clients’ future. So it is imperative to ensure I can provide the kind of help they are looking for.

My Approach is Holistic.

We begin with an accurate look at their current situation, decipher what immediate details need to be attended to and enlist the help of experts in various disciplines if necessary. If someone needs life insurance, debt consolidation, financial planning, accounting or wills, I can either make recommendations to see someone I have personally vetted or they are free to selecting their own solutions. Either way, I will help them as much as they need me to do so.

The next step is to learn more about a prospect’s investment experience and fears. I will answer any of their questions and take as much time as we need to explain. This is also where I begin to explain my beliefs and strategies for wealth creation and preservation.

Full Review.

Then I perform an assessment of all holdings in current portfolios and provide them with a full report of what I have found. I recommend any changes necessary on all holdings in order to reach their goals. Like an exercise regime, we may say we want to run a half-marathon by Christmas but if we have our hand halfway down a bag of Oreos, the goal and the strategy are not working together.

I then outline specific recommendations for any changes necessary on all holdings to match their goals and objectives set out in their financial plan. We then create an implementation strategy by purchasing securities that meet their risk tolerance, their time frame and their goals of each pool of money. A full review of their portfolio is performed every six months and any necessary adjustments made to ensure they are on track.

Review of The Seven Steps I Take to Help My Clients:

• Conduct an in depth conversation so everyone fully understands what I provide and what they want from their investments.
• Bring in any specialists the client may need to handle any immediate issues.
• Perform a full and thorough assessment of their portfolio holdings
• Outline all recommended changes required to align their portfolio with their goals.
• Implement our plan.
• Review their portfolio every six months.
• Remain available via phone, email or in person to them for any questions or discussions they need to have about their financial situation.

When you ask someone what they do, also ask the how they can help. I always have time to help my clients and prospective clients. And I'm happy to explain all of this in more detail with you in person.

Let’s get started.

Patrick C. Nicol
image credit: northings
Next post will be about what I do behind the scenes!