IN AN EXCLUSIVE INTERVIEW WITH Breaking Tax and Investment News, DR. JACK MINTZ, Palmer Chair in Public Policy at the University of Calgary, told Knowledge Bureau President Evelyn Jacks that while markets will follow history and eventually recover, what we have seen over the past two dramatic weeks south of the border is a significant event. Advisors and their clients need to be very careful and not overreact, as there is both good and bad news.
"Canada is in a better position than the US because we have done a lot of good things lately," said Dr. Mintz. "We've had good fiscal policy. Corporations on the whole are in a strong position, debt is down, and in general we are not over levered. Strength of the balance sheet is key today. In addition, Canadian consumers are not as heavily in debt as their US counterparts, and that for the moment is good news in a volatile environment."
But there is plenty of cause for caution as well, something to be discussed in earnest between advisors and their clients. "The biggest concern is for those who need credit or immediate cash flow. Many people moved into cash a while ago, but the uncertainty in the marketplace today makes it difficult to play the markets, because we really don't know how long it will take to come out of this bear market," says Dr. Mintz, recommending that it is best to avoid unnecessary indebtedness, and to understand that credit will get tighter, especially in the US."
In terms of strategy, Dr. Mintz cautions that "anyone who was retired should have thought about safety in assets when designing their portfolios. Over the long haul, 10-15 years from now, markets will be up again, but it's going to take time."
For those about to retire, it may be best to think about Dr. Mintz's words above and think about a longer term horizon in planning. "Stay diversified, he says, "and don't overreact."
Dr. Jack Mintz is the Palmer Chair in Public Policy at the University of Calgary and lead speaker at The Distinguished Advisor Conference in Monterey California, November 2 to 5th.