Are We There Yet?

On any given weekend, people flood into the Sea-to-Sky corridor to enjoy its stunning vistas, amazing hikes, and numerous avenues for adventure. At times, it can feel as though half of the Lower Mainland has the same idea: escape the city. We can’t blame them – it is a stunning part of B.C.

Driving the road between Vancouver and Squamish yields some spectacular views out over Howe Sound but these can come at a cost for some in the car. The mountains of Howe Sound seem to erupt straight from the ocean and because of that, the road has no choice but to wind its way in and out of the natural nooks and crannies.

The zigging and zagging can feel relentless, only broken by short glimpses out over the water; this makes it a popular route for people on motorbikes. But for car passengers, it can be nausea-inducing. “Look straight ahead”, “Open a window”, or “Tell me if we need to pull over” are the commandments in this situation.

Over the last couple of months, the stock markets have followed a similar path of zigging and zagging around their metaphorical mountains. It has felt equally nauseating to be an investor in this “car”. Up and down, up and down…are we ever going to get to a straighter piece of road again?

The Canadian Government and the Bank of Canada are doing their best to act like the police with radar guns, hoping that their presence on the road will be enough to slow the overall speed of the cars, smooth the ride and hopefully prevent any serious crashes. Although federal measures can help, they are not a complete solution. As an investor, you must drive the road, turns and all, to reach your destination.

It is important to remember that what we are seeing is within the range of potential outcomes one could reasonably expect to see. Dimensional’s Global Equity Index, which is an all-equity index, is down approximately 22%1 year-to- date. That is a sharp corner and is enough to make a stomach churn, but we have driven worse. The lowest one-year return for that index is -39.93%2 ending February of 2009. The highest one-year return for the index was the following year and was +53.07%3. We have been here before.

Part of experiencing beautiful parts of B.C. like the Sea-to-Sky corridor is stomaching these winding roads. It’s the same for a long-term investor. So, what can you do to combat the nausea? Keep looking straight ahead, take your Gravol, and think of the view at the top of your hike.

1: Return in CAD of the Dimensional Canada Global Equity Index as of April 21.
2: Return in CAD of the Dimensional Canada Global Equity Index from 03/08-02/09.
3: Return in CAD of the Dimensional Canada Global Equity Index as of April 03/09-02/10.