“Our RBC Monthly Morning Coffee”

‘Well sir, we were going to this bingo parlor at the YMCA, well one thing led to another, and the instructions got all fouled up…..’.

John Candy as Dewey Oxburger in the movie ‘Stripes’

After experiencing the pleasure of a fairly mild November & December period, Mother Nature has reared her ugly head with the turn of the calendar into 2019, and has caught us square across the proverbial jaw with a barrage of punches…

That being said, I know we are inching a little closer to spring when I look on the calendar in March and see the following:

March 10 th – St Patty’s Day Parade (Bloor St) March 21 st – Spring Cottage Life Show @ the International Centre in Mississauga March 29 th – Jays Home Opener vs Detroit

Fear not, folks…. there is daylight is around the corner!

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Outside of the odd trek to the gym as well as my weekly on-ice struggles trying to skate against 20- and 30-year olds, this recent weather has actually not been conducive to doing much in terms

of outdoor activity. As a result, I’ve been on a hardened search for a quality Netflix series to help endure these cold Canadian months, and I feel I’ve found one…

‘The Break’, which is filmed in Belgium (French w/ English subtitles) takes place in a sleepy village in the countryside, and revolves around a pill-popping detective who is consumed with a murder in a town where everyone is a suspect. The story itself is very similar to another favourite series of mine called ‘Broadchurch’. You might have an inclination at times to want to strangle the main character, one Det. Peters, whose actions can be at times both questionable & frustrating. It is however two seasons of entertaining drama, and in my opinion, worth every minute…

Alternatively, for those of you looking for a more upbeat & comical viewing production, I will suggest Michael Douglas’s latest project entitled ‘The Kominsky Method’, in which he and Alan Arkin are both hilarious!

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Here’s Why Canadian Rates Aren’t Moving Higher Anytime Soon

(These statistics were released from Statistics Canada last week…)

• Retail sales dropped by -0.1% in February (a drop in gasoline prices was a big factor as gasoline sales dipped 3.6% over the month) • Retail sales climbed a mere 0.7% in 2018, following a 6% rise in 2017.

Higher interest rates and softer housing markets have had the expected dampening impact on household spending. This effect isn’t entirely unwanted from the Bank of Canada’s perspective as concerns about household debt accumulation are present.

With interest rates historically low and the economy running not far off capacity limits, RBC Economics believes there is still room for interest rates to eventually rise, but not until the level of uncertainty in the investment and housing markets recede. This will take a while to become apparent in the economy with GDP growth measures likely to be subdued in the near-term by disruptions to production in the energy sector. One big factor was that e-commerce sales were up only 4.6% from a year ago, which could imply weaker late-holiday purchases.

All of this does not bode well for the strength of the C$ - if you planning to fly south anytime soon, do your currency exchanges sooner than later.

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Our Thoughts on Amazon (AMZN):

Just to preface this article, I do not currently own individual shares of AMZN for clients; I do defer to seek exposure to this company through holding the TD Science & Technology fund for clients looking for true global growth…this piece below is compliments of our research desk.

When we consider Amazon’s total addressable markets across retail & food services, drug delivery, public cloud and advertising in the U.S. alone equating to approx. $7T, we would argue that Amazon remains quite inexpensive sitting at a market cap of ~$800 billion especially against a backdrop of Amazon’s dominant market position in most of the industries it competes in.

The firm currently trades at a relatively inexpensive earnings multiple, and RBC expects the company to grow earnings-per-share (EPS) at 52% year-over-year; this is in fact achievable, given the large and growing secular growth opportunities Amazon faces.

Amazon currently resides on the RBC U.S. Large Cap Equity Grid and we continue to be constructive on the longer-term growth trajectory of Amazon shares.

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How Our Financial Decisions Will Shape Our Future

I have been hammering away at some clients on the benefits of financial plans in terms of creating clarity to actually see what tangible benefits your saving years will create into retirement… and how long these savings may carry you after your working life…

Given the recent market volatility we’ve seen, we all know that negative returns are never good news. For example, if your annual return objective is 10% and your portfolio loses 5% in Year 1, you’ll have to earn 27.4% in Year 2 to get back on track. Lose 10% and in Year 2, you’ll need a 34.4% return…

If you’re an affluent investor, it is critical to stay on top of your investment performance. I am an advocate of this, and is part of the reason that I produce regular reviews for each client. It is however crucial that you track your performance in the correct context.

The most important factor in measuring your account’s performance is that you should be sure to make these measurements against your targeted goals in retirement. These long-term ‘targeted’ goals are performance goals that are revealed by the financial planning process with which Maria and I actively like to engage clients.

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Here’s a sample of an actual financial planning case my office dealt with just recently…

I sat down with a client and during the holidays to initiate such a planning process. This client had an 80% weighting to stocks, and was also very nervous re: the future of the equity markets. At

first, the client was reluctant, but after discussions (and a solid half-nelson!), he agreed to go through the two-meeting process.

After the process, the results were this; not only would a long-term return of 4% be more than sufficient to meet his projected spending in retirement, but so would a 3% return with the additional assumption that his household spending costs would be 20% higher than predicted!

Based on this, we moved the client from an 80% equity weighing back to a 50-50 split between bonds and stocks, and reduced his risk level accordingly. He has since stated that he is sleeping better, not watching the BNN business news network as much, and is no longer second-guessing every purchase he and his partner make going forward…

If this is something that resonates with you, please feel free to give us a call….

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A Career Path into RBC

If you have anyone in your immediate family contemplating getting into this business career path I have chosen, please show this to them…

On March 27 th , our downtown RBC Dominion Securities Inc. office is hosting a career night which is open to anyone who may be looking to explore what is entailed in the career of an investment advisor. The billboard ad I’ve been sent reads like this:

Our Investment Advisors are passionate about what they do and why they do it. It’s hard not to be when your role is to help families make progress towards important life milestones.

We invite you to join us for an exclusive career-building event. You’ll learn more about the challenges and rewards of building a professional practice as an Investment Advisor and hear insights from RBC Dominion Securities executives, advisors and other members of the financial services industry.

The details are as follows:

Date: Wednesday, March 27 th Time: 5:30 – 8:00 pm Place 155 Wellington St W, 11 th Floor, Toronto, ON

For anyone interested in attending, please let me know and I will reserve a seat on your behalf.

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A ‘Read’ On Old Age Security Payments

Given the amount of questions I am receiving from financial planning clients asking for more information about their Old Age Security (OAS) payments, here is something which I hope will help…

The Canadian government (via Service Canada) recently implemented a process to automatically enroll seniors who are eligible to receive the Old Age Security pension. If you can be automatically enrolled, Service Canada will send you a notification letter the month after you turn 64.

On the other hand, you can defer the receipt of OAS benefits up to five years (60 months) after the month you turn age 65. This will result in you receiving a higher annual pension than if the benefit began at age 65.

(The above can be a planning strategy if receiving OAS during those five years will result in a claw-back of your benefits)

The OAS claw-back applies if your net income for the year exceeds an annual threshold. For 2018, the threshold is $75,910. The amount of the claw-back is equal to the lesser of your OAS payments or 15% of the amount that your net income exceeds the threshold. For 2018, a full OAS claw-back will occur when your net income reaches $123,386.

I hope this helps. Please do not hesitate to contact myself or your accountant for more information.

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‘Of Sound Mind & Body’

Decluttering how you live….

Clutter can lead to anxiety & stress, and can even trip up your diet. According to Men’s Health Magazine, it might be time to ‘clear those shelves’…

• Step 1: Look at your office, garage, bedroom, car – or any other place you get scolded for not maintaining – and ask yourself these questions: Can you easily find what you need? Can you function efficiently here? Are the other household members able to function in the same space? If the answer is ‘no’, proceeds to Step 2. • Step 2: Pull out everything & group similar items together (i.e. camping, holiday, etc.). If something emerges that does not fit a category, consider moving it or donating it. Otherwise, ask yourself, ‘If this was gone tomorrow, would I miss it…?’

• Step 3: Personal items sometimes have emotional attachment, but this can be overvalued at times. One way to break this attachment is to ask yourself if ‘this is the best symbol for who I am to my family members?!’ If not, toss it…

I’ve always been very attached to my sports card collection, which has been an obsession throughout my life. The issue is that these shoe boxes have now become considered ‘clutter’ (not by me!). My compromise was a visit to the safety deposit box section of my local RBC bank branch. Now, despite having two more keys in my keychain, I do have much less clutter in my office, and my Wayne Gretzky rookie cards are in a climate-controlled environment.…☺

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Finally…

Is anyone else other than me absolutely intrigued at what this Mueller report could possibly reveal about the current Trump administration?!

According to reports I’ve gleaned over, Mueller is required to produce a confidential report that explains his decisions to pursue or decline prosecutions. That could be as simple as a bullet point list or a report running hundreds of pages. Trump has stated such a report would go directly to William Barr, the most recently appointed Attorney General; Barr would then have to decide how much of Mueller’s findings would be disclosed to the public.

This could be extremely damaging, based on the information that is revealed (and not redacted). Late show TV host (and formerly of SNL) Seth Myers joked last night saying that if the report hurts Trump, he may well ask the North Korean leader if he can stay & bunk out with him ‘for a while’… possibly hiding in the annals of that black cape Kim always seems to wear.

(Sorry… I know this is geared to be an investment letter, but this is good stuff!!)

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Today marks the 25th anniversary of the passing of Mr. John Candy, possibly one of my favourite actors and comedians to watch on the big screen. From movies such as ’Stripes’, ‘Splash’ and ‘Summer Rental’ as well as his work with SCTV, Candy played a large part in my ability to laugh at myself and not to take life too seriously.

At the age of 43 years of age, he was simply far too young to leave. Decades later, there is not a week that goes by where I do not find myself utilizing some part of the witty & hilarious commentary that I see as part of his legacy…

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That’s it from me.

- Ian

Securities or investment strategies mentioned in this newsletter may not be suitable for all investors or portfolios. The information contained in this newsletter is not intended as a recommendation directed to a particular investor or class of investors and is not intended as a recommendation in view of the particular circumstances of a specific investor, class of investors or a specific portfolio. You should not take any action with respect to any securities or investment strategy mentioned in this newsletter without first consulting your own investment advisor in order to ascertain whether the securities or investment strategy mentioned are suitable in your particular circumstances. This information is not a substitute for obtaining professional advice from your Investment Advisor. The commentary, opinions and conclusions, if any, included in this newsletter represent the personal and subjective view of the investment advisor [named above] who is not employed as an analyst and do not purport to represent the views of RBC Dominion Securities Inc. The information contained herein has been obtained from sources believed to be reliable at the time obtained but neither RBC Dominion Securities Inc. nor its employees, agents, or information suppliers can guarantee its accuracy or completeness. This report is not and under no circumstances is to be construed as an offer to sell or the solicitation of an offer to buy any securities. This report is furnished on the basis and understanding that neither RBC Dominion Securities Inc. nor its employees, agents, or information suppliers is to be under any responsibility or liability whatsoever in respect thereof. The inventories of RBC Dominion Securities Inc. may from time to time include securities mentioned herein. Investment Trust Units are sold by RBC Dominion Securities Inc. There may be commissions, trailing commissions, management fees and expenses associated with Investment Trust investments. Please read the prospectus before investing. Investment Trusts are not guaranteed, their values change frequently and past performance may not be repeated. In Quebec, financial planning services are provided by RBC Wealth Management Financial Services Inc. which is licensed as a financial services firm in that province. In the rest of Canada, financial planning services are available through RBC Dominion Securities Inc. This commentary is based on information that is believed to be accurate at the time of writing, and is subject to change. All opinions and estimates contained in this report constitute RBC Dominion Securities Inc.’s judgment as of the date of this report, are subject to change without notice and are provided in good faith but without legal responsibility. Interest rates, market conditions and other investment factors are subject to change. Past performance may not be repeated. The information provided is intended only to illustrate certain historical returns and is not intended to reflect future values or returns. RBC Dominion Securities Inc.* and Royal Bank of Canada are separate corporate entities which are affiliated. *Member-Canadian Investor Protection Fund. RBC Dominion Securities Inc. is a member company of RBC Wealth Management, a business segment of Royal Bank of Canada. ® Registered trademarks of Royal Bank of Canada. Used under licence. © 2019 Royal Bank of Canada. All rights reserved.