Investment Risk- October 2011


I’m sure you’re all feeling as frustrated with the markets as we are, but decades of excessive spending by governments and individuals alike have come at a cost and we’re now having to pay for it one way or another. What’s worse is the inability for governments to agree on meaningful solutions, which do more than provide short-term solutions.

We’re all looking for answers to the global economic woes, but there do not appear to be any, certainly no solutions that instill confidence and this suggests that the volatility and debates will continue.

The ‘Occupy Wall Street’ and ‘My fat Greek default’ rumblings are a symptom of the enduring market drubbings and may well grow in the years to come as an icon of multi-year global excess and greed.

We Canadians are under the belief that we’re ok and have miraculously avoided the brunt of global issues. I certainly hope so, but will point out that our debt to disposable income ratio is now at a record 147% and our housing market has not corrected, but rather advanced further from the bubble peaks of 2008. The Economist magazine estimated in June 2011 that Canadian real estate is currently a whopping 23% overvalued.

Click here for an excellent article that critically reviews our (Canadian) housing and consumer debt in the global context and highlights very valid reasons for concern.

Europe needs to reach an agreement to protect its banks, put Greece to rest, and become unified. They seem to be heading that way, but there have been no decisions yet so the risks are still high.

“…there is no question that Greece is going to default….” Dr. Martin Feldstein, Harvard University economics professor.

Click here to listen to his short yet insightful interview on CNBC.

The United States Government needs to get on the same page and devise meaningful solutions to unemployment and ongoing housing concerns as well.

It is against this backdrop of dysfunctional markets that the TriDelta Investment Committee continue to focus on delivering meaningful and proactive investment strategies to grow your assets. Our first priority remains capital protection followed by appropriate growth based on individual situations.

At TriDelta Financial we’ve always been proactive in managing risk, which we have done by:

  • – Avoiding the US and Euro markets for over 6 years now and remain 95% invested in Canada.
  • – Hedging portfolio risk a number of times over the past few years.
  • – Benefiting over the years from significant gold and silver investments.
  • – Successfully raising cash on numerous occasions, but particularly through mid 2011 as global economies continue to deteriorate.

The ongoing deterioration of global economies and growth is being reflected in lower and more realistic company valuations (stock price). As this unfolds we will maintain our defensive portfolios to preserve your capital and wait patiently for the dust to settle as we scour the market for opportunities that present themselves in times of turmoil.

There is also simply no compelling evidence that the serious risks that we face have abated.

Written by Anton Tucker, Vice President