Many will write that it was the best decade ever for investors. It’s too bad of course that so many are not participating. Of course, so many were scared off by the severe market corrections of 2008 and the tech collapse of the early 2000’s. But we can’t deny that the last 10 years has been the best of times for those who did invest. Here’s the decade in review – the 2010’s.
The biggest story for the decade in review has to be the longest bull run in history. The bull run has been framed nicely within the decade of the 2010’s, it began in February of 2009. It continues today.
On a personal note I entered the decade ‘underemployed’. In the financial crisis of 2007 and beyond I was working almost exclusively on the US side of the ING Direct business. ING ran into serious trouble, and while the US bank was in good shape, the ad budget was slashed to near zero. I was laid off. But no worries, that was not my first foray into self employment and hunting for my own dinner. I soon had a thriving freelance and consulting business. Ironically that business included a substantial arrangement with the same advertising firm that had to lay me off in 2008.
Here’s a tip. When your boss lays you off, give him or her a call and take them out to lunch to let them know that ‘everything’s cool’. No hard feelings, right?
Here’s a bit about that bull courtesy of this very good article on the top financial events of the last decade.
Got US stocks?
So we have the longest bull market in history (for US stocks) but not the greatest return. But who’s going to sneeze at returns over 360%? Once again, that’s why we want to avoid that Canadian home bias. Canadian stocks performed quite well in the 2010’s but we would have left a lot on the table if we did not have a respectable allocation to the best performing stock market on the planet.
The TSX 60 XIU returned just over 7% annual for the decade. In time weighted fashion monies invested were almost doubled from 10 years ago.
Developed market stocks would have performed slightly better than Canadian stocks for the period. Here’s EAFE, currency hedged.
And the bond bull continued as well in the 2010’s. iShares Core Universe Bond Fund XBB delivered an average of 4% annual for the decade.
But of course, it’s important to take a long term view. Here’s the history of assets to 2018. That’s a useful snapshot as it will include the last 2 major corrections.
The striking developments of the decade.
The rise of passive investments vs active is a massive trend.
Of course Canadians are a little behind on the passive and the ETF investing, but we’re catching up. It’s more than nice to see that low-cost ETFs now outsell higher fee mutual funds. Recently Canadian ETF assets topped $200 billion.
Helping the cause is the rise of the Robo Advisors. Many will suggest that the Robo’s landed in Canada in 2014. You can have a read of …
I would beg to differ on that Robo arrival time as I did work at the first end-to-end digital investment experience in Canada, at Tangerine Investments. They set up shop in January of 2008. That said I did pen the article Is Tangerine a Robo Advisor? That investigation also included a Twitter poll where the respondents said ‘No!’ Tangerine Investments is not a Robo. Oh well, I’ll accept the decision of the judges.
Will Robo’s rule? Apple or Google?
The Robo advisors are part of the larger fintech revolution. Technology is disrupting money and investing as much as in any other industry. I’d bet and guess that in 2029 many will have no contact with a traditional bank. Almost all exchanges of monies will be digital. Almost all investment portfolio management will be digital. The hybrid solution of some human advice and digital execution will come to fruition as many predict. Robo’s will rule in some form. And who knows, perhaps Google or Apple will be the biggest digital ‘bank’ on the planet?
We’re just getting started.
The rise of the advice-only planners also fits into the picture. We might see more of that separation of financial planning from portfolio management. Please have a read of What is advice-only planning? I had also suggested that you consider if you do need to pay up for more advanced financial planning. You may be at the stage in your financial journey when you just need a great and cheap diversified portfolio.
The decade also delivered those game changing one ticket asset allocation portfolios. This is the easiest way to get started as a self-directed investor. Here’s an article that might help you get in the right portfolio.
Online investing at discount brokerages is now much more cost effective. Free trades are becoming more of the norm. And in Canada with Questrade, you can make ETF purchases for fee.
Fees on exchange traded funds also continue to fall.
Thank You Tax Free Savings Account.
This was the first decade for the TFSA. Americans have long been able to invest after-tax dollars in a tax free environment. This is a wonderful program of course. We can thank the former finance minister, the late James Flaherty who introduced the program in 2009.
Major trends that affect investments.
So you might think crap, I didn’t see that coming over 10 years ago. I guess I missed out as an investor. Nope. Not if you’re a couch potato index investor. You own those market leaders, those trend setters that have been been contributing greatly to US stock market returns. You’ll own the leaders from every sector.
What worked in the past will work moving forward?
Well, most of us hope so. But certainly stocks don’t always work in longer periods when inflation is factored in. And perhaps with some recency bias we invest mostly for the current economic regime. Here’s ‘what works’ historically in different economic conditions.
I had offered some additional risk and diversification options in this post on the new balanced portfolio. That does not mean, of course, that we should change course. But we might always be prepared. Traditional assets can change their tune. We could enter a different economic regime. Who knows what the 2020’s will bring?
Some other biggies!
Some additional bigger developments that deserve mention in the decade in review include bitcoin and blockchain technology. We’ve seen the legalization of cannabis in Canada and around the world.
And there may be no greater concern of course than the condition of planet that we live on. That affects us in a much larger manner beyond investing. But certainly responsible investing is starting to take hold. The go-to resource on this front is Tim Nash at The Sustainable Economist. Perhaps the decade in review post for the 2020’s will see the environment dominating the discussion.
Happy new year, and with thanks.
I launched this site and mission just 18 months ago. It’s been a success in many ways. But there’s so much ‘work’ to do. I have so many to thank from those in the blogger and writing and investment community. And of course I thank my readers and followers of this site, on Twitter, on LinkedIn, on Facebook on Flipboard, on Seeking Alpha and more.
I appreciate all of the follows and sharing of the site and posts. Together we will make the 2020’s the truly successful decade for Canadian investors. Thanks for reading the decade in review.
Happy New Year! I wish you and your family all the best in health and personal and financial happiness.
Dale and family.