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TFP will help you understand and profit from it.

 Even the most successful and savvy investors can be rattled awakening to the seismic shifts that increasingly occur overnight in Asian markets.  It’s big news the media likes using to greet the day with ratings fire and everyone’s question is simply what does it mean?

Here’s what you need to know.

Big shifts, and even big losses in the Chinese stock market are hard to ignore and sound significant, but their market doesn’t function like Western markets.  Equities sold in China don’t allow shareholders to control companies.  Prices of stocks and equities aren’t related to the underlying value of the companies.  Additionally, market capitalization has little bearing on the value of these companies and compared to sheer size of China’s economy, the percentage of wealth in their markets is actually quite small.

What’s more, it may be big news but it’s hardly new news, the United States and Europe have already reduced the amount of imports response to the global recessions triggered in 2008.  China, after such extraordinary expansion, was already reaching the limits of what their economic model could sustain, and instituted a variety of subsidies and programmes to fuel continued growth in the GDP.

Yet while this effort to sustain growth and mitigate decline was possible because of their deep financial reserves, those efforts could only do so much and last so long.

China’s economy has been slowing for some time, although official growth statistics peg 2015 4Q at 6.9%, If anything, China’s economic shift reflects an ongoing progression to what is the new normal and investors need to understand that China, clearly one of the world largest – if not the largest and most important exporter – while not unstable, isn’t immune to risks, and ups and downs as we all are.

China’s stock market is not a function or an indicator or a predictor of the economy.

Let TFP help you take advantage of the changes and opportunities of global economic shifts that aren’t to be feared – they’re simply the new realities of the international markets and if understood, opportunities for investors to confidently – and shrewdly – build wealth today and tomorrow. 

Throughout history risk tolerance trumps all.

Investors and analysts study market internals across individual stocks, industries, sectors, niches and security types, dutifully seeking to understand what we’ve always known:  For all of the vast information, the lessons aren’t new ones.  Long-term investment returns are tied to value while short-term gains in shorter cyclical periods within the markets’ longer cycles, are driven by risk tolerance. 

No surprise that when market internals are favourable, market overvaluation is usually ignored in pursuit of short-term gain.  When internals go south, risk-aversion surges north.

The role of central banks is equally predictable and has little cause and effect on the stock market, but is directly linked to investor willingness to assume – or avoid – risk. Investors speculate with favourable market internals and retreat to safety when they deteriorate. The yield-seeking speculation driving the purchase of stocks, or a host of other assets viewed as risky, happens when a large segment of investors believes that doing so won’t expose them to broad capital losses.

Central Banks quantitative easing can be read both ways. The case can easily be made that too many investors see what they want to see and filter-out what they don’t, especially when internals are favourable – driving speculation as investors reach for yield confident that sharp price declines won’t wipe out their extra gain. 

Valuations, elevated even when market internals may be unfavourable, may be inadequate incentive for investors to forsake safe liquidity and more modest returns. Ultimately, Central Bank easing may not be enough to stimulate speculation when market internals fundamentally deteriorate. 

Typically, what predictably follows unexpected economic weakness is most often decline.  Rate cuts may not be welcome and may be not only ineffective, but a signal that the worst is still to come.  There is nearly of century of historical evidence to support this.

Look back to 1930.  The Fed began cutting rates two and a half years before markets finally found the bottom. Seventy-one years later, in 2001, the Fed cut rates as the two-and-a-half- year bear-market collapse was only beginning. Federal funds rates, first cut in 2007, were cut to the bone through the crisis of the Great Recession.

But here’s the big lesson. Reductions of a fraction of a percent in interest rates can’t be relied upon to drive investors’ willingness to expose themselves to major losses when the market internals to warrant taking on risk simply aren’t there.  As has always been the case, there is no greater driver than investor willingness to accept risk, and no greater brake on growth, than aversion to it.

Investment Advice without hidden fees or a hidden agenda.

The question most asked of investors is how are you doing? We’ll ask you another question we think is far more to the point:  How is your Investment Advisor doing? 

The real binding thread linking investors of all kinds today is a growing crisis of confidence about the quality and the cost of the investment advice they’re getting and their inability to fully understand what they’re paying for.  A deluge of recent industry studies and media reports suggest that a majority of Canadians are paying absurdly high fees, and they don’t begin to understand them as their advisors earn lofty commissions by pushing investments with prohibitive, often hidden fees.

At TFP we eliminated this problem years ago.  Instead of constantly trading and churning clients’ accounts as some brokers do, we replaced commissions with flat-fees, full disclosure, resources like no one else, and access to a members-only website so our clients can see how they’re doing On-Demand, 24/7/365.

No extra fees, no commission-driven agenda, but common sense benefits that put clients first.   Things you might not expect, but we think you deserve.

• Regular updates about latest market trends and investing strategies.
• Investor Resources on a members-only website with 24/7/365 access.
• Quarterly reports and The Advisor
• Superior Customer Service. Call or email, we’ll answer and respond back quickly.
• A Free, No-Obligation Consultation to ensure we’re a mutual fit.
• And what no one else offers: A Full-Fee-Back Guarantee, if after joining us, six months later you’re not satisfied.

We’ll earn your trust – and your confidence – with transparent processes, honest advice without a commission-driven agenda, superior service, resources designed for your needs and convenience, and a common sense, client-centric approach you’ll find refreshing.

At TFP, we think you should get more, pay less and look upon your financial advisor as a trusted advisor.  That begins with an approach you can believe in, flat-fees you understand, and peace-of-mind that your investment strategy is tailored to your goals, preferences and risk tolerance.

It’s time to stop paying too much for too little.

Reach out with an email or a phone and get the conversation started. We look forward to talking with you.