BJK Financial Group Blog

March-04-2022

Even though we count on February to be our shortest month it hasn’t felt like that this year. It’s hard to believe that the Truck Convoy arrived in Ottawa at the very end of January. Then the truckers and their supporters, bouncy castles and portable hot tubs planted themselves on Wellington Street and took over our nation’s capital. The story then filled news broadcasts here in Canada and around the world for the next three weeks.

And just as the truckers were removed from Parliament Hill, we were confronted with Putin’s attack on the Ukraine. And as I get ready to post this story it is difficult to know just how this story is going to unfold.

Both stories have real life consequences. They have meaning in our lives and the lives of everyone around us. But it’s important to get past the chaos these stories have generated.

Things like this happen - there is always something else around the corner. But when we are in the midst of them, we cannot properly understand their long-term consequences - which could be very different from their immediate impact.

You need to keep in mind that your retirement and investment portfolios should be treated as long term entities with a shelf life that extends over decades, not weeks.

Events in the news affect the markets – In the short term

You will see lots of stories about market fluctuations caused by events like this. It’s the kind of reactions that investment fund advisors warn their clients about all the time.

Back in January I wrote about the potential impact the Omicron variance could have on the market. And now, as of the first of March, we are seeing Ontario lift vaccine passports.

I don’t mean that events like this and many others are meaningless. Far from it.

But we need to recognize that a particular event’s long-term impact is affected by other events – events that never stop happening.

Yes, Omicron set back many efforts to reopen issues around the supply chain. Canadians are seeing inflationary pressures we haven’t seen since the 1970’s. The Truck Convoy reinforced that point, even though the vast majority of Canadian truckers chose to become vaccinated and were able cross the border. Whether they had anything to haul, or there were enough truckers to do the actual hauling is another issue.

It’s always something – Just stay the course

As a matter of fact, in recent months we all were fixated on a ship blocking the Suez Canal (You remember that don’t you). And now there’s another ship with millions of dollars worth of cars that keeps on burning and no one can put out the fire. These too, shall pass.

And the market is appropriately jittery about event in the Ukraine and its impact on Europe. But we don’t really know how that will roll out, do we?

The possible impact of events in Ukraine on ESG

In fact, I have seen stories about the need for Western Europe to accelerate their efforts to cut back on Russian natural gas. This might become a triggering event in our effort to cut back on fossil fuels and beef up renewables. But that’s just speculation on my part – for sure...

But what about inflation?

The important point to remember is that we have to look at what has a long-term economic impact and what doesn’t. Yes, we are seeing inflationary pressures that affect what we pay in the grocery store.

And, the Bank of Canada may have to increase the prime rate, triggering a rise in mortgage rates and the cost of capital.

But many analysts (some even smarter than me) think that these pressures may be short lived – caused larger by supply chain issues caused by the COVID shutdown and alleviated by its demise.

Build for the future you want to see

Here is where current events should affect your investment decisions.

Let me help you to choose investment vehicles that encourage positive economic and environmental change. And let me show you how you can use regular contributions to your investment portfolio (often called dollar cost averaging) to iron out those wrinkles that current events trigger.

Remember, we’re in this for the long haul.