2022 Winter Newsletter

Christine Fortin - Feb 26, 2022


Our General Principles for Investments

  • It will be worth restating, even in the context of a letter primarily focused on the year just past, our overall philosophy of investment advice. It is goal-focused and planning-driven, as sharply distinguished from an approach that is market-focused and current-events-driven.   Long-term investment success comes from continuously acting on a plan. Every successful investor I've ever known was acting continuously on a plan; failed investors, in my experience, get that way by continually reacting to current events in the economy and the markets.

  • You and I are long-term, goal-focused, plan-driven equity investors. We believe that the key to lifetime success in equity investing is to act continuously on a specific, written plan. Likewise, we believe substandard returns and even investment failure proceed inevitably from reacting to (let alone trying to anticipate) current economic/market events.

  • We're convinced that the economy cannot be consistently forecast, nor the markets consistently timed. Therefore we believe that the only reliable way to capture the full long-term return of equities is to ride out their frequent but historically always temporary declines.

  • Just in the last four decades or so, the average annual price decline from a peak to a trough in the S&P 500 exceeded 14%. One year in five, the decline has averaged at least twice that. And on two occasions (in 2000-02 and 2007-09), the Index has actually halved. Yet the S&P 500 came into 1980 at 106, and went out of 2021 at 4766.18; over those 42 years, its average annual compound rate of total return (that is, with dividends reinvested) was more than 12%.

  • These data underscore our conviction that the essential challenge to long-term successful equity investing is neither intellectual nor financial, but temperamental: it is how one reacts, or chooses not to react, to market declines.  We mostly feel that as advisors we would have been well served with a Psychology degree v. an Economic one 

  • As long as your long-term goals haven't changed. As a general statement, we, The Fortin Wealth Advisory Group, have found that the more often investors change their portfolios (in response to the market fears or fads of the moment), the worse their long-term results.

  • In sum, our essential principles of portfolio management remain unchanged. (1) The performance of a portfolio relative to a benchmark is largely irrelevant to the long-term financial success. (2) The only benchmark we should care about is the one that indicates whether you are on track to accomplish your financial goals. (3) Risk should be measured as the probability that you won't achieve your goals. (4) Investing should have the exclusive goal of minimizing that risk.

  • These principles will continue to govern the essentially behavioral nature of our advice to you in the coming year…and beyond. 

* Sources: Standard & Poor's; Yahoo Finance; J.P. Morgan Asset Management “Guide to the Markets” (p. 16); S&P 500 Return Calculator with Dividend Reinvestment, DQYDJ.com.

Current Observations

I am writing this on the precipice of a lot of nervousness around the I-word (invasion) and disturbing talks from the media of what could be WWIII.  This should be clarified by the time this goes to print and passes the compliance test.

I circled back to my opening comments from last year   “Once in a very great while, there comes a year in the economy and the markets that may serve as a tutorial—in effect, a master class in the principles of successful long-term, goal-focused investing. Two thousand twenty was just such a year.”
I have a sly smile as one could say the same about 2021, and now into 2022 given pandemic, a freedom convoy, and war news that fills our headlines. 
However, it would seem to be counterproductive to look at these past 12 months in isolation. They were, rather, the second act of a drama that began early in 2020, the precipitant of which was the greatest global public health crisis in a hundred years.

  • The world elected to respond to the onset of the pandemic essentially by shutting down the global economy—placing it, if you will, in a kind of medically induced coma. The USA experienced the fastest economic recession ever, and a one-third decline in the S&P 500 in just 33 days.

  • Congress and the Federal Reserve responded all but immediately with a wave of fiscal and monetary stimulus which was and remains without historical precedent. This point cannot be overstressed: we are in the midst of a fiscal and particularly a monetary experiment which has no direct antecedents. This renders all economic forecasting—and all investment policy based on such forecasts—hugely speculative. I infer from this that if there were ever a time to just put our heads down and work our investment and financial plan—ignoring the noise—this is surely it.

  • If 2020 was the year of the virus, 2021 was the year of the vaccines. Vaccination as well as acquired natural immunity are in the ascendancy, regardless of how many more Greek-letter variants are discovered and trumpeted to the skies as the new apocalypse. This fact, it seems to me, is the key to a coherent view of 2022.

  • In general, I think it most likely that in the coming year (a) the lethality of the virus continues to wane, (b) the world economy continues to reopen, (c) corporate earnings continue to advance, (d) the Federal Reserve begins draining excess liquidity from the banking system, with some resultant increase in interest rates, (e) inflation subsides somewhat, and (f) barring some other exogenous variable—which we can never really do—equity values continue to advance, though at something less (and probably a lot less) than the blazing pace at which they've been soaring since the market trough of March 2020.

  • Please don't mistake this for a forecast. All I said, and now say again, is that these outcomes seem to me more likely than not. I'm fully prepared to be wrong on any or all of the above points; if and when I am, my recommendations to you will be unaffected, since our investment policy is driven entirely by the plan we've made, and not at all by current events.

  • With that out of the way, allow me to offer a more personal observation. To wit: these have undoubtedly been the two most shocking and terrifying years for investors since the Global Financial Crisis of 2008-09—first the outbreak of the pandemic, next the bitterly partisan election, then the pandemic's second major wave, and most recently a 40-year inflation spike. You might not be human if you haven't experienced serious volatility fatigue at some point. I know I have.

  • But like that earlier episode, what came to matter most was not what the economy or the markets did, but what the investor himself/herself did. If the investor fled the equity market during either crisis—or, heaven forbid, both—his/her investment results seem unlikely ever to have recovered. If on the other hand he/she kept acting on a long-term plan rather than reacting to current events, positive outcomes followed. It was ever thus. I expect it always will be.

As always, I welcome your comments, questions and concerns. As always, I can't predict, but I can plan. As always, I thank my clients for working with me and my team. It is a privilege to serve you.


THE NEXT MEGATREND: Explosion of the Global Middle Class


If you get me talking about perspective around the current economy and how we properly need to align that to investments, you may here me talk about “Long Term Secular Trends”.   I am referring to the 20-40 year trends that are propelling the world forward.   Most often, selecting best of breed companies that are aligned with those secular trends reduces your volatility and frankly, if have demonstrated the ability to create long term stability of earnings, then we should scream with glee for any selloff to acquire more of these droolworthy names at discounted pricing.

One of the terms that I discussed the last five years is this title… I may refer to things like Consumer Discretionary or Fintech when referring to the whole new group of population who will purchase these items.
As recently as 50 years ago—just as mankind's most important invention, the microprocessor, was dawning—one half of the world's population lived in extreme poverty, as it was then defined.

Currently, only about nine percent of the global population lives in extreme poverty, and the percentage is continuing to decline rapidly—as is global illiteracy. Certainly, an ultimate megatrend of the past half century. 
I came across an astonishing chart from J.P. Morgan Asset Management. Which appears on page 54 of the October issue of Morgan's  “Guide to the Markets.”

The chart is based on the groundbreaking work of Dr. Homi Kharas and his colleagues at the Brookings Institution. This particular chart illustrates Brookings's finding that from 2020 to 2030, more than one billion six hundred million people—the vast preponderance of them in India, China and elsewhere in Asia—will be drawn up into the middle class. (“Middle class” is defined in this instance as households with per capita incomes between $11 and $110 per person per day in 2011 PPP terms.) This is roughly equivalent to five more USAs emerging over just these 10 years. And then the trend will continue.
(Another way to think about the staggering potential here is to realize that, of the world's 7.8 billion people, 3.6 billion—or very nearly half—still don't have internet access.)

What will be the effect of this explosive proliferation of middle class consumers on the businesses of The Great Companies of the World? One can only imagine. But whatever it is, we can be sure that forward-looking managements at The Great Companies are even now devising products, services and distribution strategies to take full advantage.
What a wonderful age in which to be a long-term, diversified, mainstream equity investor.


We have added a new member to our team, Ryan Lidder, of which you likely saw the announcement.  Ryan is a key strategic addition and will level up the wealth advice that we provide to clients.    With over a decade of observing dozens of teams, he is proud to have found his career destination.

In Ryan’s words:

“My personal career aspirations centered around aligning myself with a client centric wealth management team. One that focused on holistic HNW financial planning, while delivering individually tailored asset management at an elite level. After a decade of working in the wealth management industry,  I'm excited and honored to have found that team in the Fortin Wealth Advisory Group, and I look forward to working with you all.”
Ryan and his wife, Amm, are expecting baby #1 any day.   They, like Christine and Kent, decided to opt for a surprise of the gender!  Pictures next newsletter.

January was a busy one for our team members.  Sofia has been arranging for TFSA contributions.  Christine has been working on publications and structuring Reviews for the coming year.   (Look for us to be communicating on the new Client Reforms that started in our industry January 1, 2022).  And we are in the midst of putting on a large scale LIVE TRAVEL EVENT for our clients with World Renowned Travel Expert, Robin Esrock, to start to dream about locations to attend as travel mandates soften.

Christine and Kent and Kase as usual spent the Christmas holidays and into January at their ski chalet where poor Kase broke his collarbone… AGAIN.  Same one, different spot.  He met a tree and the tree one.


Christine is still working on her Harvard Leadership Course and hopes to complete that by June.

Christine has just booked her first family vacation outside of the country since Italy 2019.  They are heading away for the beaches of the Mayan Riviera for Spring Break.