Hey friends! Given all the Trumpuncertainty out there I am getting more texts and emails than usual. Reminds me of when I was researching stocks and managing portfolios and participated in a number of pullbacks and my phone was ringing off the hook:

• 2015, down 14.0% in 7 months

• 2018, down 19.8% in 3 months

• 2020, down 33.9% in 1 month

• 2022, down 25.7% in 10 months

• 2025, down 15.6% in 2 months

Emotions run wild sometimes and the key is to keep control of your attitude as best you can (see today’s Quote, my favourite of all time). No matter the situation, try and keep calm, focus on today and tomorrow, not yesterday, for the greatest enemy of the investor is their own emotions.

Today each section features correspondence with readers on each subject of Personal Finance, Stock Markets, and Real Estate. Turned out to be a long email today so I apologize in advance 😊.

Hope you enjoy!

Personal Finance

Hey Eddie!

Seeing as though participant questions are encouraged (and can help motivate future newsletters), I do have a question I’ve been meaning to ask you! I have found myself in a situation where I have $80K to invest. It’s largely because my RBC Direct corporate investing took ++ long to set up (so inefficient and time-consuming and lots of back and forth with RBC). Anyways, I couldn’t invest cash until now.

If you were in my situation, would you buy $80K of investments now (all at once)? Or invest a bit now, and continue investing weekly, until it’s all invested? I worry the market will continue to drop, so I feel like holding off and investing weekly or every 2 weeks is where I’m leaning. But then wouldn’t I be “timing the market,” which is discouraged? I just anticipate the markets continuing to fall.

Where would you invest it if you were me? With everything going on, do you still think S&P 500 is the way to go, or should I consider some global markets like XWD? Another option is I do half in HISA and half into S&P 500.

I saw your request for quotes, but I’m not a quote person so had no recos. In grade 12, my yearbook quote was “Don’t look back unless it’s to see how far you’ve come”, which I always laugh/cringe at because it’s so incredibly cheesy and unfitting for a yearbook where the whole purpose is to look back and reminisce on good times. But there you go—a possible quote for next week’s newsletter 😂

Thanks for your insight on my above question!

—Sarah

Hey Sarah, nice to hear from you!

Yes, it's always great to write back and forth and help with future ideas—and hopefully help you too. And thank you for the quote, which I will use in the future!

Good questions. You've found yourself in a "lucky situation"—you managed to miss this latest correction due to the lag in actually setting up your portfolio. Count that as a win!

But as we know, that's pretty much pure luck. Maybe three months ago, the entire world and stock market thought Trump was going to ignite a fire underneath the stock market and it would soar.

Who would have thought to be sitting all in cash at that time? It just so happens you were lucky to stay in cash.

Now, when it comes to what to do with your cash and how to deploy it—you've already kind of stolen what I might have responded with, which is: you have cash to invest, a long time horizon ahead… and by choosing to delay investing it, you are inherently timing the market. In effect, you believe the next few days, weeks, or months the market will keep dropping.

Maybe it will! Or maybe it won't. Maybe we are one dramatic relief headline away from the market turning on a dime upwards.

Point is, nobody knows for sure. Perhaps the intuition you have is solid, but it's hard for me to "agree" with you in fact... you see my challenge in providing you a straight answer ;) lol.

Here are my thoughts—take them as you wish:

1. Statistically, deploying 100% of a lump sum results in the best performance due to time in the market—compounding.

2. The market is down 17–20%, depending on what day we’re looking at. And like just buying when Lululemon pants are on sale by 20%—statistically it's a good thing to buy when stocks are down if you have a long-term time horizon.

3. Statistics, however, while important, don't reflect emotions. Investing is not just about numbers; it's about how you react to them.

Therefore, striking some sort of balance will give you a satisfactory performance result over time and appease your risk tolerance too.

If I'm trying to put myself into your shoes, I might consider this:

1. Buy $20,000 in S&P 500 today, $25,000 in 3 months, and the final $35,000 in 6 months.

2. If the market drops 10% between Tranche 1 and Tranche 2, accelerate the second purchase.

3. If it drops another 10% (meaning the stock market is now down 40% from the all-time high—this would be kind of a worst-case scenario like 2008), then accelerate your third tranche too.

4. Any cash you have in between should be invested in a HISA so you earn some interest along the way while you wait.

Or, if the money is truly long-term, buy it all today and forget about the news. And assuming you're going to be super effing rich with more income from your doctor practice, the $80,000 today may not even register compared to your future contributions to your portfolio anyway.

Oh—forgot to answer you on the XWD vs. the S&P 500. Honestly, that's another guess—both are good options. If you feel more comfortable putting some money in both, then go for it.

Boy, this got long! But I hope it helps :)

—Eddie

Hey Eddie,

The timing of your email reply was hilarious. “One dramatic relief headline away from the market turning on a dime upwards”—then Trump tweets about a 90-day tariff pause and we saw just that, briefly. I laughed and had to check the time you sent that and compare it to the time he tweeted.

Now I’m kicking myself for not buying earlier yesterday, but I wasn’t ready to commit to anything yet. I guess it just reiterates the importance of ignoring emotions, not trying to time the market, and just buying when you can.

If my corporate investing account had been set up earlier, I would have just invested smaller amounts as they entered the bank. You're right—I'm lucky this happened overall. But now, this amount seems larger than I'm used to, and I'm overthinking it.

Thank you for your thoughtful reply and options laid out clearly. I like the idea of a three-phase staggered approach the best, with HISA investing in between. Overall, I like the idea of spacing out the S&P purchases because it feels less like a one-time big commitment, and I can let this money ride through more of the trade war drama.

I know I might be trying to 'time' the market a bit and letting my feelings about the trade war influence me… but it’s okay to invest with emotions if you've got good emotional intelligence… right? Haha.

At the end of the day, like you said, being in the market for the long term is most important and will give the best results anyway, so I'm not going to stress about it too much.

Thanks again for your insight and time, Eddie!

You’re doing great things.

—Sarah

Hey Sarah, thank you kindly, glad to help. Talk soon.

—Eddie

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Stock Markets

Hey Eddie - Just a quick update, markets are rallying (surprise surprise) after he announced a 90 day pause... very happy I did not buy yet because there is very little chance this holds, and 125% on China will still cripple a lot of American industries. 

—James

Hey James - Just for fun I’ll bet you a coffee that in 12 months the market is higher!

—Eddie

Haha, will take you up on that, no way, 24 maybe, but 12 months from now I just don’t see it, too much uncertainty. 

—James

Hey James, here’s why I’m betting a coffee that the market will be higher 12 months from now (S&P 500 level to beat: 5,237.73, mark your calendar!):

1. We’re already down ~16% from recent highs. That kind of drawdown already prices in a lot of fear, uncertainty, and bad news.

2. Historically, when the market is down 15% or more, the odds favor a rebound. According to data from JPMorgan and others:

3. Since World War II, in every case where the market dropped 15% or more, it was higher 12 months later 75% of the time.

4. Average 1-year return after a 15%+ decline is ~20%.

5. People forget how fast sentiment flips.

6. In Q4 2018, the market dropped nearly 20% in 3 months on “Fed tightening” fears. My phone was going crazy! Then poof. It rallied almost immediately and hit new highs the next year.

7. During COVID, the S&P 500 dropped over 30% in just over a month. Within 5 months it was back at all-time highs.

8. Uncertainty is always loudest near bottoms. But that is the wall of worry markets historically climb. Uncertainty isn’t a reason markets don’t go up — it’s often the reason they do.

9. Over the long run, markets trend up. The S&P 500 has posted a positive return in 75% of all 1-year periods, and over 90% of 5-year periods. Trying to time that based on today’s headlines is a losing game, in my humble opinion.

All that being said, I’m not changing my investing strategy outside of my automatic purchases and automatic dividend reinvestments—if i do I’ll let you know. Maybe if we kiss a 20% decline, I’ll add more than normal. Ditto at 30% decline.

Anyway, looking forward to coffee next year 😉 

Real Estate

And here we see it impacting every sector—big real estate purchases going from all in—to off the table—back to all in.

1 Quote

“The longer I live, the more I realize the impact of attitude on life.  Attitude, to me, is more important than facts.  It is more important than the past, than education, than money, than circumstances, than failures, than successes, than what other people think, say or do.  It is more important than appearance, giftedness or skill.  It will make or break a company... a church... a home.  The remarkable thing is we have a choice every day regarding the attitude we embrace for that day.  We cannot change our past... we cannot change the fact that people will act in a certain way.  We cannot change the inevitable.  The only thing we can do is play the one string we have, and that is our attitude... I am convinced that life is 10% what happens to me and 90% how I react to it.

And so it is with you... we are in charge of our Attitudes”

Charles Swindoll

A Question

More of a statement today - thank you to everyone submitting quotes! I will be featuring them as I go along. Have a great weekend.

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Thank you

Eddie Gudewill, CFA

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