Episode 66: 2022 | In the Rearview

A look back at what did and didn’t happen in 2022. It was the best of times. It was the…well, we don’t need to elaborate too much on that front. You were there. We’re talking about the biggest stories of the year! The guys also go over the predictions they made for 2022, join us to see whether they’re prescient or just very clever. (Spoiler alert, you’ll want to listen to their predictions for 2023 in the next episode…)

Episode Transcript

BARENAKED MONEY PODCAST: EPISODE 66

2022 | In the Rearview

Announcer:

You are about to get lucky with the Barenaked Money Podcast, the show that gives you the naked truth about personal finance. With your hosts, Josh Sheluk and Colin White, Portfolio Managers with WLWP Wealth Planners, iA Private.

Colin White:

Welcome everybody to a special year end-ish edition of Barenaked Money. We’re sitting here recording this on December the 30th. Josh and I are holding down the floor again. As usual, Josh is way more prepared for this than I am, and I just can’t wait for the ride that Josh is about to take us on. Josh, take it away, buddy.

Josh Sheluk:

Well, in true year end fashion, we decided that it makes sense to recap the stories of the year, which there were many to choose from, but we think we’ve hit the biggest, broadest, most impactful topics. But also, we both went back and listened to our predictions podcast from the start of 2022, and which we made 10 predictions for the coming year. And so we’re going to recap that as well. So stay tuned for that because I found it pretty interesting. And there’s one there where I just almost fell off my chair. It’s kind of eerie to how close some of the predictions came to some type of alternative universe type of prediction. Anyway, I’m looking forward to that, but why don’t we kick it off as stories of the year, Colin?

Colin White:

Oh, look, absolutely. Do you want me to kick off with what I think is probably the most impactful story of the year on a somewhat serious, less entertainment and glitzy mode?

Josh Sheluk:

Yeah, sure do it.

Colin White:

I think inflation is probably the story of the year, and it’s actually a year long story because it was only in December of last year, the Bank of Canada stopped calling inflation transitory. This year, Tiff Macklem, let us vote, and said that Bank of Canada got it wrong. And they’ve been aggressively chasing down the inflation monster this year. I’ve never in my life noticed a central banker being as dogmatic as Tiff has been on the whole, “We will bring inflation down to 2%, it doesn’t matter how many people have to die to get there.” Kind of almost political posture he has been doing this year, which is, I’m not sure how I feel about that, as to, I like my central bankers to be more in the background, being more mellow dudes. I’m not sure how I feel with the level of vitriol that Tiff has been coming out. And the places he’s been showing up talking, like he’s seeming to wade into the political realm a little bit.

And anybody gets covered with chicken shit when you go into those games. Anyway, I think that that’s kind of a multi-headed, thematic story of the year that has a couple of hairs on it. And I think it’s going to continue to play out into next year. Josh, was that number one on your list?

Josh Sheluk:

Yeah, I didn’t really rank mine, but to me that is the driving force of everything else that we’ll talk about in terms of stories of the year. And I was thinking, as I was reflecting on the year, I was thinking, damn, this year seems like it’s been a long year, doesn’t it? Can you imagine? Can you believe that it was just not even 12 months ago that we had this pivot from the central banks where they said, “Well, this is no longer transitory.” And then they started hiking rates aggressively. It feels like we’ve just had five to 10 years worth of activity in the markets that have all been condensed into 10 to 12 months. It’s really unbelievable.

Colin White:

Well, it’s been, I would call a dense for sure. I think some of it’s a bit of a pent up demand. A lot of the things that have unwound or unwoven this past year and have talked about for while, again, I’ve been talking about high interest rates for a good chunk of my career. So a lot of this stuff I think was expected over the last number of years, but as it really has sprung this year. And we’ve got a dramatically different landscape now, dramatically different landscape from a setting expectations, a planning perspective. And as much as we exist in an ecosystem that does affect what’s possible, what’s tenable and what our expectations should be, so the best laid plans, were not going to protect anybody from the upheaval we’ve gone through this year.

Josh Sheluk:

Yeah. That seems to be the perfect word to describe this year to me, is dense. It’s like we took everything that was supposed to happen over the last 10 years and crammed it all into 10 months. And you mentioned inflation, you also hinted at interest rates there. So inflation at 40 year highs, interest rate at 15 year highs, give or take. But also sort of next story of the year for me is this real estate crash that people have been predicting as long as I’ve been in this business, and can we call it a crash? The numbers I see say down 12 to 15%. Can we call that a crash or is that more of a correction in your mind?

Colin White:

Well, I call it more of a correction. To me it’s going to go over the 20% mark. But the problem is that we got really inadequate price discovery in real estate markets. Everything is a lagging indicator. It seems to be very regionally focused. And the liquidity’s gone away for sure. We’re not seeing the number of transactions, which again, to me, leads to less pure price discovery. I think a lot of real estate got pulled forward when the rates got really, really high. So a lot of people who may have been thinking about selling a piece of property for whatever reason, they think that inventory was kind of pulled forward. And there’s going to be the ability maybe from the overall market to be a little bit more patient for a bit. I hope that lower prices don’t persist. But I think it’s much tougher. It’s a bit more exciting to say it’s crashed. Sure, we could say it’s crashed, but I would say it was more of a gentle swoon, a decline, if you will.

Josh Sheluk:

Yeah. Gentle swoon it is. So the numbers I saw down 12 to 15% or so, depending on what index you’re looking at from the Canadian Real Estate Association there. But to your point, it’s a very heterogeneous market, real estate. And I was talking to my cousin, who’s a real estate agent, over Christmas and he was saying, “Yeah, some markets in the greater Toronto area here are down about 35% from the peak.” So you have some that are probably holding up just fine and others that are down at the third from their peak earlier this year. And that’s a pretty stark difference. So depending on which part of the world that you live in, it could be a true crash for you or you could have just experienced the gentle swoon like you said.

Colin White:

Well, the other thing about real estate is, real estate has got the capacity to go zero bid in certain circumstances for a period of time where it’s just not liquid. There’s not a taker at any price. And look, we’ve got some tax changes that are going to kick in next year that are going to make investing in real estate a bit more problematic, a little less [inaudible 00:07:11], on top of the interest rate moves. So yeah, there’s a number of things still to play out there. So you gather there are people, and I know of one or two, that are sitting in a situation where if they tried to give it away, they probably wouldn’t be able to find someone to take it on right now.

Josh Sheluk:

And coming back to our initial story, inflation drove up interest rates to significant extent. And interest rates have, to me, been a significant driver in the decreases in price of real estate. So this stuff is all intertwined and interwoven.

Colin White:

Well, as it’s intended to be. Because again, I saw some math, and again, depending on what assumptions you make and how you hold your tongue, the decline in real estate prices at the increase in interest rates have left the monthly costs of home ownership roughly at the same level.

Josh Sheluk:

Yeah, sure.

Colin White:

Depending on, again, you have to make a couple of assumptions here that it doesn’t always hold true, but at the end of the day, that’s the expected intent or the expected outcome of economic policy like this. It’s not as if people can afford to spend dramatically more for a house. It just makes the house worth less because more of that money’s got interest.

Josh Sheluk:

Yeah. Yep. That’s great. So the next one, and as I was going through my stories of the year here, I was thinking, “Oh, that’s not good. That’s not really nice either. That’s bad too.” Like, “Oh, I don’t have any good stories.” So unfortunately this won’t be a super rosy podcast. But my next one is stocks and bonds, both down double digit percentages this year. And bonds having, by most accounts and by most data sets, the worst year in recorded history.

Colin White:

And again, this is one of those things, and again, we’ve talked about this before, where bonds trade every day, but if you’re holding a five year bond and you’re going to hold it to maturity, what somebody’s willing to pay you for that bond this year, doesn’t really matter [inaudible 00:09:11]. So again, people talk about lost plenty of bonds this year. Well, if you’re actively trading them or you’re liquidating a bond portfolio, then share them, yes, you have lost. But again, holding these instruments to maturity, we haven’t done, correct me if I wrong Josh, we haven’t seen any material default increases in investment grade bonds for sure. I’m not sure what’s happening in the high yield space, whether we’ve seen increase in defaults, but we’re not talking about the bond market defaulting, we’re just talking about the current value of a long-term bond portfolio being less than last year, which is not as apocalyptic as some of the commentators will talk about this topic.

Josh Sheluk:

So bonds are down 10% in value, in price, what people would pay for them today, which is, again, a function of higher interest rates. Interest rates go up, the prices on bonds go down. But you’re exactly right. Assuming that the issuer of the bond doesn’t default, doesn’t run out of money to pay you back, you’re still going to get your full repayment on maturity of that bond. And you’re also right. The default rates have maybe ticked up ever so slightly, but they’re not at a concerning level by any means at this point. So could that be still coming? Yeah, it’s still could be coming, but the decrease in the value of bonds is really a function of interest rates going from effectively zero to the highest that they’ve been in 15 years in a very short period of time. And that’s startling.

Colin White:

Oh no, for sure it is. But I do think it’s important for people to realize, because again, if a client sees three or four statements in a row drop, they do a calculation on a straight line basis thinking their account’s going to zero. Again, unless bond defaults, it doesn’t go to zero. It could take you longer to get your money back into it, but it’s not going to zero. There’s a baseline somewhere absent of defaults. It’s just the way the bonds work. So that gets lost in the shelf.

Josh Sheluk:

Yeah.

Colin White:

People talk about bonds lost money this year, the value of the bond portfolio is down for sure. But the bonds didn’t go away.

Josh Sheluk:

Yep. And I think this has become a bigger story this year than it would otherwise because stocks are do down as well. So typically when you see stocks down, you rely on bonds to be the ballast for your portfolio. And this year they haven’t been that for people. So any of those investors with a diversified or balanced portfolio are feeling it more than they normally would this year.

Colin White:

Are you telling me during times of self market volatility, correlations go to one, that the predictive value of correlations in good times are not all that valuable when times get rocky? Is that what we’re learning, Josh?

Josh Sheluk:

So typically, I’m going to push back on this, because typically risk assets, the correlations will spike, for sure. So your Canadian stocks are going to perform like your US stocks, like your cryptocurrencies, like your global stocks, et cetera. They’re all going to be very correlated. But your safer assets, your government bonds for example, typically hold up very well. And correlations don’t go to one, they typically stay uncorrelated. But that hasn’t been the case this year. So that’s why it’s been a very unusual year, this has never happened where you’ve, and I shouldn’t say never, but not in the data records that we have going back about 50 years with bonds, we’ve never seen a year where stocks have been down double digit percentages and bonds have been down double digit percentages as well.

Colin White:

Yeah. Well, again, it’s at least a matter of the magnitude, the shock that has assisted. In the 2008, there was also a increase in correlation between various asset classes and geographies.

Josh Sheluk:

But bonds did well. If you had government bonds, you did well with those government bonds in 2008.

Colin White:

Yeah. Well, the government bond, again, we can go back to the history books and get into the corporate bonds and yield all the rest of where the real problem happens in 2008. But yeah, it’s important to realize that we make assumptions and we build boats, we build a boat the best way we can, the most balanced way you can. And then the weather happens. And I think it’s important for people’s expectations to be realistic. You can do a lot to mitigate things, you can do a lot to put the odds in your favor, but every once in a while it just hits. And I think this is one of those years. It’s an odd position for us to be in because, I don’t know, the word comfortable is not the word, but it seems more natural that everybody’s kind of accepted where things are, compared to times when part of the economy is doing it super badly and some of it’s doing really, really well. I guess it’s more of a homogeneous like, “Yeah, everything’s not doing well.”

So there’s a bit more acceptance I think, during this time than there has been during other market upheavals previous.

Josh Sheluk:

Yeah. Speaking of not doing well, my other story of the year, the crypto crash.

Colin White:

Well, yeah. Who would’ve thought it? Oh wait. Oh wait. It’s sad. It’s just sad. I think the stories that are coming of now. Again, I saw the guy they brought in to clean up in [inaudible 00:14:35], the guy that cleaned that mess up, he’s appearing before the US Senate, he’s testifying. Man, the inner stories coming out of that space are just unreal. The fact they wanted to send the guy that they just arrested down-

Josh Sheluk:

Dan Bankman Fried, yeah.

Colin White:

Yeah. So he was using QuickBooks, he was running-

Josh Sheluk:

Was that true? I didn’t hear that.

Colin White:

Swear to God. They’re asking about the record keeping. And the guy kind of shook his head, he goes, “What records there were and there weren’t many, so they were using QuickBooks.” He was very quick to say, he goes, “Which is a wonderful tool,” not designed to run a multi-billion dollar company though.

Josh Sheluk:

Yeah, no doubt.

Colin White:

And this guy’s just shaking his head. He goes, “They’re asking me to compare to [inaudible 00:15:23].” He goes, “There’s no records, there’s no corporate governance.” There’s no nothing. Billions of dollars you’re talking about. It’s just… I don’t know. It’s even hard to say that we were right other than we didn’t really believe it. I don’t think I would’ve predicted the level of depravity that’s coming to light. And it certainly gives me no joy. But I can’t also say I’m all that surprised, because, again, you give a completely anonymous world, you’re going to attract the most greed, the most wrongdoers, man. It’s going to lead and is leading to more and more regulation in the space.

Josh Sheluk:

Yeah, I’d say we would’ve predicted a crash at some point. We were pretty negative on the space, or at least I should say very cautious on the space anyway. And this is a true crash, by the way. I looked at the market cap numbers and it went from about 3 trillion to 800 million for all the cryptocurrencies combined. So you’re down about 75%. So that’s a crash. That’s a crash. That’s a true crash, no doubt about that.

Colin White:

What’s beyond crash, though? I think 20% is considered crashing. When you get over 75%, is that an obliteration?

Josh Sheluk:

That’s the word that came to mind for me. So obliteration or if you’re just at zero, it’s just, it’s over. It’s over. So I don’t know. That’s, I guess, what we call death. But yeah, as I was saying, I wouldn’t have predicted the level of fraud that has gone on with some of these right across the board. Now maybe I should’ve. Maybe that was foolish of me. Maybe I had a little bit too much faith in humankind. But yeah, this is, it’s just next level stuff. And sandbagging Fried was six months ago, the so-called golden boy of crypto, and now he’s whatever the opposite of a golden boy is. I don’t know. A stone boy.

Colin White:

Well, yeah, this is leading us to a language problem. We don’t have words to describe the level of what’s happened. So I think, all right, Josh, you need to come up with the language plan, make a note. You and I need to sit down with Catherine to come up with a language plan to describe exactly the level of pooh that has gone on. I’m thinking lots of words in my head that Catherine will split vote later, so I won’t use them.

Josh Sheluk:

But again, to some extent, I think this has been, I don’t want to draw a line between interest rates and crypto, because I don’t think that there’s any line to draw there. But it’s a reflection of the greater risk aversion that’s now come into our world with higher interest rates and lower stock prices and lower bond prices and lower real estate prices and all that. I think it’s spilled over to just about every asset class that’s out there. If you can even call cryptocurrency an asset class. I don’t know if we’re going that far.

Colin White:

Well, no, it’s a Ponzi scheme is what it is. Now you raise an interesting point, Josh, there’ll be papers and studies done on this. Now, was this a Ponzi scheme that was going to collapse of its own volition at some point just because it was so completely fraudulent in what was going on. Or was it actually propped up by how cheap capital was. There was a lot of money floating around which made it a bigger Ponzi scheme than it would’ve otherwise been, or allowed it to exist longer than it otherwise would have. Or are they two separate issues? That’s actually a very good question. I’d read that paper if somebody wrote it.

Josh Sheluk:

And I think both those things are true. I think there was an inevitable collapse at some point, but I think the low interest rates was like pouring gasoline on an already roaring fire. So not something that you want to do most of the time.

Colin White:

And I still keep thinking about this, this could be of a Napster-esque kind of event with this technology of the space that it’s the first swing at the CAD is going to be outside of the legal bounds of normal conduct. But what’s going to get left behind is something that maybe is revolutionary and useful. Again, I keep saying that but I still struggle to see it. The technology for me at this point still seems to be a solution looking for a problem.

Josh Sheluk:

I still think, again, I’ve said it a few times on the pod, I still think that there’s going to be something that comes out of the crypto space, whether there’s just the blockchain or the cryptocurrencies itself, but I’m not futuristic enough to be able to figure out exactly what that is. And that that’s why we stayed away from it all along. The space, it stank of a bubble and a crash waiting to happen. But beyond that, there is something there, I think. I still think that.

Colin White:

Well, little boost in the wash doesn’t [inaudible 00:20:23]. For me it’s getting a little bit eclipsed by some of the other technologies that are coming out with the new AI applications and something. I’ve seen some stuff in the last month or two that just absolutely are a quantum leap about how we’re using technology now and some of the stuff that’s possible. So again, it may be a solution looking for a problem is going to get completely wiped out by even newer and betterer more advanced technologies in this space. So it may miss its moment.

Josh Sheluk:

Pretty soon we won’t even need to record a podcast because we’ll be able to deep fake ourselves into it like some of that technology’s doing now. So that would be great. That would be a lot of free time for us.

Colin White:

Yeah, that’d be a little spooky. I wonder what I had to say today. I better listen to it because if somebody asked me.

Josh Sheluk:

Now that that’s all that I had down here for my stories of the year, is there anything that I didn’t touch on that you think is worth talking about?

Colin White:

Seems, again, the topics we’ve talked about are quite dense for sure. Other stories of the year, industry-wide, the SRO combination in Canada. So the investment industry’s going to get a little bit more streamlined in Canada this year, which is a move forward, it’s going through some bureaucratic hurdles. But there’s some fundamental changes afoot and the Canadian marketplace, which should make it better. I was a little surprised at how little pushback or what’s been said about the Royal Bank buying HSBC’s assets in Canada, having an oligopoly allowed buyout another player in the space and have it be the largest of the player buyout another player. At what point will somebody opened their eyes and going, “Maybe that wasn’t a good idea.” This is nothing against Royal Bank other than, again, it’s you want competition in the marketplace. That’s a governmental rule. Left to its own devices, there will be one winner, truly capitalistic system. So you can’t blame the players per se.

And Royal Bank actually did that because they were forced to put more money on the balance sheet by the regulators during COVID as a backstop. So they had extra money. Their obligation to shareholders was they had to deploy it. So this is just an opportunity. I think that’s under reported yet very big story. This share in something that’s is material, it’s going to change, and maybe not in a good way, I’ll change the fleeting marketplace in the moment.

Josh Sheluk:

Yeah. It’s interesting, in kind of the same month that happened as well as just last night there was basically a thumbs up for the Rogers Shaw merger to happen. I’ve been hearing for the last couple years that governments in the western world, especially Canada and US, we’re going to get a little bit more strict on the anti-competitive behavior like these mergers and monopolies and things like that. But certainly over the last year I don’t see that much coming to fruition on the Canadian side for sure.

Colin White:

Oh, and it’s interesting because I do think that you have seen some progress in de-globalization of global economies also. Countries have gotten back a little bit more to being more self-reliant given the fragility and what’s happened for the last number of years. So there has been some, I don’t know if progress, I guess progress is the way to describe it, from governments against pure capitalistic or pure profit motive organization of the marketplace. So that’s an interesting dynamic to watch, but doesn’t lend itself to a nice little paper.

Josh Sheluk:

Yeah, right. What else? Anything else that’s hot button topic for you?

Colin White:

No, I think, well those are the important things. I think we’ve covered the inflation’s feeding and interest rates I think is the dominant story. The geopolitical strike in Ukraine, I think took everybody by surprise.

Josh Sheluk:

Yeah, I guess that would just January. Yeah, that’s true. I don’t know how I missed that on the stories of the year.

Colin White:

Well, it’s not purely a financial story. It does have financial ramifications. And look, and really quick to say, it’s a human tragedy. But we’re not studying the humanities here, we’re just talking about the financial impact. I’ve been a little maybe oppressed with the ability of the global economy to shift, energy suppliers and about food stuff coming into Ukraine, and how the globe is seemingly doing okay with adjusting to things. And the perceived magnitude of the upheaval.

Josh Sheluk:

Yeah, I’m going to call that the non-story of the year is this so-called oil at $200 a barrel catastrophe on food prices. Yes, stuff got more expensive this year, and yes, it was pretty detrimental for a while there, but far from this catastrophe that was being predicted early on where we’re not going to have any gasoline, we’re not going to have any greens, we’re not going to have any natural gas to heat our homes like that. We’ve been able to pivot very well, speaking to the quality of the global economy, I would say.

Colin White:

Oh, for sure. Now again, I don’t want to undersell the absolute suffering going on in Ukraine and many people in areas of Europe that are affected by this. I don’t want to for a second gloss over what that is. But again, from a financial perspective, and I say this to clients all the time, our bet is the global economy is going to find a way forward. That you invest in a diversified portfolio and trust the global economy to find a way forward and don’t get you caught up in trends and investing in very specific fragile areas. You can count on that. So yeah, I’d swear the global economy is solid 8.5 out of 10 this year on its ability to pivot. Adjust to some very, very big disruptive forces.

Josh Sheluk:

Not without issues, but it’s been, again, multiple years of chaos and we seem to have come through okay. Despite everything that’s going on.

Colin White:

Yeah, listen, and I’d push back to that. I think we’ve come ahead swimmingly, that the quality of life that we get to continue to enjoy. Yeah. We [inaudible 00:26:45]. Technology, what it’s been able to do. The medical science side of what we’re able to do. It’s just a year that we, again, another story we haven’t talked about, we’re not talking about COVID.

Josh Sheluk:

Yeah.

Colin White:

That’s a story. We’re not talking about it. Medical science is going to wrestle that one to the ground like it has every other problem that has faced humankind over the last number of decades. So yeah, I think there’s all kinds of reasons to be optimistic and proud of the ability of humankind to forge wave forward.

Josh Sheluk:

So can I recap our last year’s predictions, mostly my last year’s predictions and get your grades and your thoughts on them?

Colin White:

Sure. Are we going to keep track of them? So it’s the final grade like you wanted last time?

Josh Sheluk:

Yep. Yeah, exactly. You can give me a pass or fail at the end based on an average of the grades or something.

Colin White:

Sure.

Josh Sheluk:

All right. So just for reminder, for anybody that has listened to us regularly, we did early in 2022, a set of 10 predictions. Some were legit predictions, some were a little bit bent in our favor to provide a specific type of message to the audience there. But anyway, I’m going to run through them, call in and you can let me know what you think of them here in hindsight, of course. Now, number one, last year’s predictions. These predictions won’t be on any other podcasts.

Colin White:

No. Some of the themes may have appeared in other places, but no, ours is way less interesting than every other prediction I read for 2022.

Josh Sheluk:

Or way more interesting, depending on how you look at it. Now, I didn’t listen to every other podcast I should say. So we can’t really litigate this one 100%. So I don’t know, I’ll give myself an X and say that I didn’t get that one right, but we’ll move on here quickly. Number two, there will be market volatility.

Colin White:

Yes, there was, and the volatility of the matters to people, as I described last year. It’s only the downward volatility that people notice, describe as being volatile. And we had that this year.

Josh Sheluk:

Year. Yeah, in droves for sure. All right, number three, and this, you owe me an answer for this one as well.

Colin White:

Oh.

Josh Sheluk:

You will. We will. We all will regret one investment nondecision in 2022. Now, you said last year that you don’t really regret nondecisions anymore or investment decisions, but you did admit that there’s probably going to be one nondecision this year that you regretted. So which one is it, Colin?

Colin White:

You know what? Regret is a hard word, man. I think I have something to learn from this year, so maybe that’s a better way of putting it. It is always difficult to maintain an even perspective on things. We, in January of this year, had come to accept a number of things as being unexplainable, but just the way it is, whether it was the valuation on some of the tech giants or Tesla or companies like that. And just because that’s the way it is, everybody was kind of a bit, I felt I became a bit more accepting of those anomalies than maybe I should have. At the time I would’ve said, “Look, it is what it is. I don’t understand it, but it is what it is. So I’m not going to be too fast about it.” I guess I learned about myself that every once in a while, I do go along with the crowd a little bit. Maybe I should have been more boisterous in my opposition to going along with some of those things that, again, hindsight’s 2020.

But there were some things. And we didn’t hold big huge positions in any of these things, but we were exposed to them. Yeah, I have trouble justifying that to myself. So that that’s kind of a regret, isn’t it?

Josh Sheluk:

Yeah, quasi regret, let’s call it. All right, number four, you’re moving on. There will be somewhere between 150 and 300 million media publications making projections and zero of that will be useful.

Colin White:

The stakes aren’t high enough for anybody to do the math of this one, Josh, so we can’t prove you’re wrong. So therefore we’re just going to have to say you were right.

Josh Sheluk:

Sure, sure, sure. Yeah, I’m sure if there were 300 million media publications making projections, at least one of them would be useful. So I’ll give myself an X for that one because it must be wrong. This one I thought was interesting. So politics will come into your realm this year, but won’t have any bearing on the investment decision making that we should be doing. I feel like this year has been much less politically driven than past years. But maybe I’ve just had the politics beaten out of my head and put it in the back of my brain. What do you think?

Colin White:

Well, I think it depends, and it’s funny as you’re saying that I’m kind of trying to define politics in my head because Bank of Canada, is that a political? That’s not political. It’s governmental. And that has changed the water on the beans and the economic policy out of the banks have changed the water on the beans, that’s probably not by the purest definition politics. There’s been significant changes tax wise or [inaudible 00:32:14] significant moves in overshares. There have been changes tax wise that have caused changes to planning for people for sure. Is that political? I don’t think so. I think what we’re referring to was more the boisterous bad haircut from the south and things of that nature, which I think has waned a little bit. I think some of the edge is coming off some of the more extremes, whether it’s the trucker convoy here in Canada or people like [inaudible 00:32:44] or the people south to the border. I think my perception is their influence is seeming to have waned. I think I stick by it.

Josh Sheluk:

Waning or not, still that relevant for investment decision making, which was kind of the point last year that we were trying to make, is like, “Don’t make decisions on this stuff.”

Colin White:

And it’s become easier to abide by that. By it waning even less of a perceived thing. So yeah, it’s never been something to make investment decisions on.

Josh Sheluk:

Yeah. So number six, this is my favorite prediction in hindsight. Elon Musk will tweet something this year and it should be completely ignored.

Colin White:

Yeah, yeah. No, he didn’t tweet something, he bought the Twitter.

Josh Sheluk:

Well, first, so here’s where I was completely wrong. He tweeted something that was huge that he was going to buy Twitter and he actually did it. So it shouldn’t have been completely ignored. It should have been totally and completely accepted as truth. So he totally threw me off.

Colin White:

Well, no, but you said he was going to tweet something that should be ignored. I don’t think you said everything he tweeted should [inaudible 00:33:58].

Josh Sheluk:

Oh I guess, sure.

Colin White:

I’ll give you a pass to this one. But no, this is something we haven’t talked about. In the name of all that is holy, oh my God, something cash fire like this in real time. Yeah. Everything from running a poll or whether he should resign. Come on. They ask the internet to name a boat and it got named Boating MacBoat Face. You don’t ask the internet questions like that.

Josh Sheluk:

It was a story to behold, that’s for sure. Moving on here. Number seven. If you have a long-term investment rise, the markets this year, 2022, won’t materially affect that path or the path towards one’s goals.

Colin White:

Yeah, when I heard that, we really need to put this in context because I think we’re right, long-term it hasn’t impacted, long-term this is what is expected to happen from time to time. But the caveat is that it dramatically can impact short-term decision making. And it should. There’s no way around it. To ignore the events that are going out around you because your plan is so rock solid. Oh, this is one of those times where we are at a bit of an extreme where a modification of your expectations and plans can make a material difference to your long-term happiness. So if you’re thinking about buying a yacht, maybe waiting a year until your portfolio recovers, you’re going to get more money to spend and you’re going to have a nicer yacht. So what has happened this year reasonably should be considered in your short-term planning, what am I going to do this year versus what kind of put off a little while? Absolutely has crossed that threshold.

But no, I don’t think it changes the long-term. Oh, there’s some lessons have been taught. I think, so maybe some people have learned some things about, again, how specific do you want to get with your investments, the importance of being with the cool kids and Bitcoin and stuff like that. So I think there’s some lessons that have been taught there, but I think at it’s core all that prediction is something you can say every year, and I’ll be okay with it.

Josh Sheluk:

Yeah, for sure. So number eight here, unfortunately this is more right than I wanted to be. Stock market returns will be lower than the prior year. Go figure.

Colin White:

Yeah, the little slower, yeah. Lower’s the word.

Josh Sheluk:

So I think that as we sit here today on the 30th, it looks like the S&P 500 is going to be somewhere around 45% less in terms of return than the prior year. So it’s up in the high 20%s in 2021, and looks like we’re going to close down 18% or so in 2022. Got all my dates messed up there. But anyway, you got the point.

Colin White:

Yeah, no, no, absolutely. Things were lower. We were and had been to our [inaudible 00:36:58] I don’t know if nervous is the word, cautious when we did this January of this year. And not for any specific reason. We didn’t know how wrong the Bank of Canada had gotten it per se. We were still on the fence with what that was. But just that feeling of everything’s gone really well for a while and we’re due, that was definitely our mood in January. So we were relatively cautious on our look at that point. And not to steal the thunder or jump to the end, but at this point I’ve got more optimism now than I had a year ago as to what comes next. Now that we’ve seen the selloff, we’ve seen things retrench. I think that we can expect reasonable returns on a go forward basis much more confident than a year ago.

Josh Sheluk:

Especially, not to change topics, but especially on the bond side where we’ve seen interest rates come up quite substantially. So yeah, it was a painful year for bonds, but I feel very confident now that bonds will look a lot better over the next five years than I would’ve said a year ago.

Colin White:

Well, and not to jump in, but I mean people and everything and I’ve had conversations with a couple of people saying, “Yeah, bonds didn’t do well this year, which is sell them and go buy a GIC.” It’s like, “Don’t.” Well after they sell off. Again, didn’t default. They’re going to keep earning at that GIC rate going forward. That’s the reasonable expectation. Again, people’s reaction to say, “I got to jump, pull the plug, because they didn’t protect me this year.” Just accept the fact that you’re going to be wrong every once in a while and things don’t work out. That doesn’t mean you should dramatically change course.

Josh Sheluk:

Yeah. So number nine here, someone will tell you that real estate is the best investment you can possibly make. Little did I know, I was for foreshadowing a whole bunch of chaos in that market as well.

Colin White:

Oh listen, for anybody who hasn’t listened to the podcasts around the time you were buying a house and I was selling a house. And the podcast we did around those. I think your timing of buying a house and listening to the trailing indicators of what was supposed to be happening and the reality of what was actually going on at the moment, the dichotomy there is so instructive, I guess. So often people are looking at trailing indicators and they’re trying to behave in the current day based on what that is. But current day is the current day. This could be when it’s changing and that’s a real thing.

Josh Sheluk:

Now, number 10, there will be more cryptocurrencies at the end of the year than at the beginning.

Colin White:

So did you check?

Josh Sheluk:

I did.

Colin White:

So of course you did.

Josh Sheluk:

So I listened to this last night. I laughed at myself because I was like, “There is no possible way that I was right about this one.” Little did I know there are more cryptocurrencies. So I went to a website called coinmarketcap.com that kind of tracks the price of all of them. And there’s something like 9,300 listed today, and there is about 8,700 listed at the start of the year. So in a complete obliteration year for cryptocurrency, there is still somehow new cryptocurrencies listed. Who is buying this shit this year?

Colin White:

Well, no, the fact they exist doesn’t mean that a lot of people are buying them.

Josh Sheluk:

Well, they have to. I guess, can you create a cryptocurrency with nobody to buy it? I guess you could just give it away. That’s one option.

Colin White:

Oh, you know what we do? We need to send a suggestion into John Oliver this week, tonight or whenever his show is, because he was the one, he’s launched ministries, he’s launched all kinds of different cockamamie stuff. We should get him to launch his own crypto and watch what happens with him. I’d watch that show.

Josh Sheluk:

After seeing Dogecoin and Shiba Enu and something called Polka Dot and all this other stuff, I’m done with watching this stuff. I think it’s time to move on.

Colin White:

Oh, but it’s going to give us more. All right, here’s a thought. I’ll give a prediction for next year. We’re still going to be talking about crypto.

Josh Sheluk:

Wait for the predictions podcast, Colin. That’s coming next week.

Colin White:

Sorry.

Josh Sheluk:

Anything else worth noting before we wrap up here at the end of the year?

Colin White:

I think we covered it all. And hey, to our faithful listeners, thanks. And as always, we’d love to hear comments and feedback and ideas for new shows, ideas for guests. We exist to entertain you. So let us know how we can provide that entertainment.

Josh Sheluk:

Yeah. Thanks so much to everybody for listening this year. It’s been a pleasure recording for you. We hope you tell your friends.

Announcer:

This information has been prepared by White Leblanc Wealth Planners, who is a portfolio manager for iA Private Wealth. Opinions expressed in this podcast are those of the portfolio manager only and do not necessarily reflect those of iA Private Wealth Inc. iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.

Colin White:

We’ve noticed something. It seems there are a lot of people who would rather try to figure out their lives with an online calculator than air your finances to a human. Stop doing that. You need to talk to someone who can help direct you, tell you where to start with what you’ve got to make the biggest impact on your future. You can’t figure that out in doihaveenoughcash.com, but you can figure it out by chatting with us. Call us. It’ll be okay, you’ll see.

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