Managed Money Reporter Newsletter — Issue 264, July/August 2011


Editors: Carl Spiess & Allan McGlade


Featured Articles



Ahhhhh…summer!

Canada's brief but glorious summer is upon us. Now that the nice weather has arrived, we hope you and yours are finding time to relax and enjoy the many outdoor experiences Canada has to offer.

In keeping with the season, this edition of the Managed Money Reporter will be as short and sweet as summer itself. Hopefully, our investment advice will help you take your mind off the markets for a few months at least, and let you enjoy the warm weather. Remember, our office is open year-round, so please get in touch if you need to.

Everyone at the Spiess McGlade Team wishes you a safe and relaxing summer season. We look forward to hearing about your vacations and activities come the fall.

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Market Update: Is this a good time to invest?

If you’ve been watching the markets, you have noticed that they have been giving back most if not all of the gains made in the first four months of this year. The pullback was not surprising to us; in fact, we anticipated it in our last edition of Managed Money Reporter.

As the volatility in world economies continues to affect markets, the question we are getting most often from clients relates to the seriousness of this downturn. Is it a correction, or the beginning of a bear market? We firmly believe it is a correction. In fact, we see it as a buying opportunity, and we have been recommending putting cash balances to work.

For a more detailed view on what is going on, please read this market update from ScotiaMcLeod's Portfolio Advisory Group:

Market Update, June 2011

Here’s a quick summary.

  • Summer is a seasonally weaker trading period for the market.
  • The rally before this correction was nine months long; periods of consolidation tend to follow periods of excess return.
  • Corporate profits and strong balance sheets have been driving the rally.
  • The traditional economic indicators of an impending recession are not in place.
  • European and U.S. debt problems are a definite distraction, as is inflation in emerging markets like China, India and Brazil; effects of the Japanese crisis are still being felt.
  • Worldwide economic growth should slow, but conditions are in place for a promising fall investment season.

We are pleased to also provide the most recent economic update including currency and interest rate forecasts from Scotia Economics.

Global Forecast Update, June 2011 (from Scotiabank's Global Economic Research)

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Tax-plan your charitable donations

Continuous financial pressure on government services is making philanthropy more important than ever. When it comes to making donations, however, there is a good and a better way to do it. The better way makes optimum use of the tax rules associated with charitable giving.

You’re probably accustomed to making donations in cash. But if you invest some of your money in a non-registered account, you can donate securities that have increased in value and essentially “give away” your capital gains tax liability at the same time. The recipient—a tax-exempt registered charity—won’t have to pay it either.

Then you can take an equivalent amount of cash you would otherwise have donated, and reinvest it in the non-registered account—even in the very same securities you donated. If you do that, your asset value will be the same, but your cost base will be higher. In other words, you’ll start fresh again with no capital gain and zero tax liability.

Mackenzie and Dynamic have taken this principle and wrapped it into programs that are basically little personal charitable foundations. The programs are explained quite well on their web sites at the links below:

The less it costs you to donate, the more you can ultimately afford to give to your favourite charities. If you like any of these concepts and want some help setting them up, please give us a call. It’s a worthwhile thing to consider!

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Recap: Fund Performance Updates

Over a year ago, we surveyed a sampling of clients to get their feedback. One of the things survey respondents requested was more communication about the funds they hold.

We heard you loud and clear. Over the past six months we have passed along news—good and bad—about some of the investment funds most widely held by our clients.

Chances are you received an email message or a letter about one or more of your funds. In busy times, it can be difficult to keep these messages together and digest their impact; so, in the summer months, we're recapping our 2011 fund-related communications.

We will continue to issue updates on funds that warrant your attention. However, if there is a fund in your account that you are concerned about—or you feel is underrepresented in your portfolio—please contact us and we will be pleased to review your holdings with you. We can help you objectively decide whether any investment continues to be appropriate for you.

Below are the Fund Performance Updates (and relevant attachments) we sent out over the last six months:

  1. CI Harbour Fund & CI Harbour Growth & Income Fund
    Jan 20, 2011
    (No Action Recommended)
  2. Mackenzie Ivy Canadian Fund & Mackenzie Ivy Growth & Income Fund
    Feb 25, 2011
    (Action Recommended)
  3. AGF Traditional Balanced Fund
    Mar 10, 2011
    (Action Recommended)
  4. AGF Canadian Asset Allocation Fund
    Apr 1, 2011
    (No Action Recommended)
  5. Dynamic Balanced Funds
    May 30, 2011
    (No Action Recommended)
    Attachments:
  6. CI Global Fund
    Jun 15, 2011
    (Action Recommended)

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Investment Team News

David Hillier recently satisfied the provincial requirements for providing life and income replacement insurance. That’s great news for the team and our clients because insurance is the “protection” building block of a sound financial plan, and it can play a valuable role in an estate plan. Please feel free to contact David to review your needs for life insurance, disability, critical illness and long-term care.

Christina Calvert has successfully passed the Canadian Securities Course and is on her way to becoming a licensed staff member. It’s a great career milestone for Christina, and her accomplishment adds another layer of depth to our investment team. Way to go Christina!

Debbie-Ann Espiritu is taking a year of maternity leave starting August 1. Congratulations to Debbie-Ann and Erik on the upcoming birth of their first child! She has been training other members of our team to cover her responsibilities, but her presence will be missed at the office!

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Recommended Link of the Month

Hey, who says we're all work and no play? We do love summer, and living locally can be a lot of fun.

That's where walkscore.com comes in. Just enter your address (or any other address) and you get a Google map that identifies nearby parks, shops, restaurants, and more. You gain an instant sense of the 'walkability' or 'bikeability' to local amenities. In these warm(ish) weather months, you may discover a new hidden gem of a boutique or eatery close to home.There's even a link that lets you measure affordability.

Check it out!

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Contact Us

T.  416.863.RRSP (7777)
     1.800.387.9273
F.  416.863.7479
E. carl.spiess@scotiawealth.com
    allan.mcglade@scotiawealth.com

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