By Scott Ronalds

From our Quarterly Report:

2013 has been a year of environmental disasters in Canada, but from an investment point of view, it’s been pretty good so far. You might be surprised to hear me say that because interest rates have moved up and June was a weak month in the markets. Bonds dropped in price and most dividend stocks (especially REITs) were weak. And then there was the resource stocks, which continue to dive – gold is down 25% this year and mining stocks in general have been hammered.

Diversified portfolios at Steadyhand are up between 2.5% and 5% year-to-date, mostly because of our equity funds. The goings-on in June were a good reminder of how important it is to take … you know what’s coming … a long-term view. Investing is all about being disciplined, patient, calm, courageous at times, and boringly disengaged from the everyday noise.

What did we do for our clients? Well, we did a lot of thinking. It felt good to be well positioned going into June (low bonds, high cash, lots of quality and foreign stocks, minimal mining and gold), but it wasn’t a time to be smug. We don’t think the economic outlook has changed significantly.

The excellent bond returns of the last few years were borrowed from the future, but a portion of that obligation was repaid with the interest rate increase. We’re still projecting modest bond returns going forward (low yields = low returns), but some of the rate risk has come out of the market. In my view, stocks were trading in a normal valuation range before the June weakness (albeit at the upper end) and are still there (closer to the middle).

Read Tom's full brief and the rest of our Report here.

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