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M&A Investor Insights (Part 1 of 5):        An Important Look Back Thumbnail

M&A Investor Insights (Part 1 of 5): An Important Look Back

Manulife Capital Markets team recently reviewed the last several years of interesting global phenomenon and compared market returns of the S&P 500 (the index measuring 500 of the United States’ top companies) over that same 7-year period.  The question to ask yourself as you read the following list is, “how would I expect the market to have performed during this time period when such things occurred?”

Let’s take a closer look at what took place over those years:    

  • ISIS would control large portions of the Middle East in an extremely short period of time
  • Donald Trump will be elected as President of the United States, defeating Hillary Clinton 
  • BREXIT will happen resulting in the United Kingdom leaving the European Union
  • The United States will enter a trade war with China
  • We will see negative oil prices of -$35/bbl as measured by WTI
  • Russia, the United States, ISIS, (and others) will be embroiled in a war in Syria
  • The Interest Rate Yield curve will invert
  • We will have a global pandemic and governments all around the world will implement severe lockdowns and travel restrictions
  • After being elected, Biden shuts down the Keystone XL Pipeline 
  • There will be wave after wave of COVID sweeping through the world
  • We will see supply and labor shortages in virtually every industry
  • Most people will be working from home for at least a year, seeing their colleagues digitally the entire time
  • Many small businesses will fail because of COVID lockdowns
  • Russia will invade Ukraine and will attempt to take the capital city of Kiev

If most of us knew that each of the aforementioned phenomenon would occur over the last number of years we might have completely avoided investing into the S&P 500 market. We’d simple say “No thanks, I’ll just sit this one out”. However, over this same period of time the S&P 500 market nearly doubled at 98% growth!

One of the key takeaways from this example is that investment markets do not necessarily respond to headline events in the way we might initially believe, or in a way which is comfortable for us psychologically.  It’s for these important reasons we employ the professional skillsets of leading investment management firms which arise from decades of experience and the wisdom which accompanies it.

Maurice Matte