As a result of a number of recent high profile cases uncovered in the U.S. and Canada involving investor fraud and theft of client assets, Hemisphere Capital Management (“Hemisphere”) feels it is important to review our operational protections and regulatory controls that are in place to safeguard your assets.
Gross Domestic Product (GDP) is a measure of all goods and services produced in the economy. The most common method of determining a nation’s GDP involves totaling all consumer spending, business spending/investment, government spending and net exports (exports less imports).
Since the start of 2007, the Canadian dollar has strengthened upwards of 20% against the U.S. dollar. When the loonie hit parity in September, Canadians paused for a modest (typically Canadian) celebration. During early November, our dollar continued its climb eventually spiking to $1.09, a level not seen since the 1870’s. From its low five years ago, the loonie has experienced a 65% gain. The mighty loonie seems to have given Canadians a new sense of confidence.
An important, and sometimes misunderstood, item impacting investment returns is inflation. Investment returns require a common basis for measurement which in our case is the dollar. As a paper currency, the dollar has no fixed value except a promise by the government to pay you its current purchasing power. Throughout history, the “market value” or purchasing power of all currencies has declined (in many cases quite severely). Inflation is the measure of that decline in purchasing power or currency debasement. A 10% return is excellent if inflation is 2%, but poor if inflation is 9%.
Much of what is said and written about investing is speculation. This is the natural result of the shortterm focus of our emotions and the financial news. Even the rate of return one has achieved in the past several years is just a moment in time relative to one’s long-term investment horizon. Realistically, anyone trying to assess investment returns will want a history of at least five years, and preferably ten, to begin the task.