UPtober Myths & Market Realities


The often coined “UPtober” (in investment circles) seems to be more myth than reality this year. Following September's market challenges, there was widely held investor optimism that October, with its historically strong seasonal trends (see chart below for S&P500's strong months over two decades.), coupled with the market's oversold conditions would bring about renewed positivity. Whispers of an early Santa Claus rally fueled hope for year-end strength, contrasting against a very challenging 2022. However, as we've seen time and again, markets remain unpredictable.

Source: Equity Clock: The displayed chart spans two decades of monthly S&P 500 averages,
highlighting months with notable strength

Over the past month, equity markets have faced renewed turbulence, far from the optimistic projections many held. The momentum that drove the first eight months now visibly waning due to a myriad of factors:

When combined, they have set a challenging stage for the financial landscape. For our regular readers, the topic of rising interest rates won't come as a surprise. It has been the primary culprit hampering both stock and bond returns since early 2022. As highlighted in our previous update, September witnessed a shift in bond markets towards bear-steepening conditions. This phenomenon, where long-term bond yields (those not dictated by central banks) rise faster than short term bond yields, presents unique challenges. Unfortunately, this trend intensified in October, pushing long-term bond rates to levels not seen since 2007:

While these conditions have weighed on bond prices, they have also impacted the global currency markets as differences in interest rates between the US and it’s global peers have further bolstered an already strong US dollar. Given the dollar's role as global reserve currency, this influences international business widely. Consequently, many countries have intervened to protect their weakening currencies by offloading US Treasuries, which ironically pushes rates higher in self-reinforcing cycle. The important takeaway for investors here is that a surging USD is typically detrimental to stock prices.

Considering the current state of the markets, a logical question arises: how much more can longer term US treasury rates appreciate? While a definitive answer remains elusive, there are a couple of indicators suggesting we might be nearing a tipping point. First, from a technical analysis standpoint, bonds appear to be in a severely oversold state. And if technical indicators have any significant utility, it's in highlighting potential reversals in market trends. Second, comes from billionaire hedge fund manager Bill Ackman. Ackman was quite vocal on social media a month ago, revealing his bet against longer-term bond prices, expecting them to drop and yields to rise. Yet, this week, he reversed his stance, announcing he's exited that position, indicating a shift in his outlook:

Source: Twitter

While it's prudent not to overemphasize the perspective of a single investor or lean too heavily on technicals and sentiment, they are noteworthy points of interest. This is particularly true as investors work to pinpoint the precise catalyst for the recent surge in yields, especially in light of weakening growth and inflation expectations.

If you’ve gotten this far in our update, you might be asking, "Jack, aren't you overlooking the glaring issue influencing the markets this month?". To address the rising concerns we've been fielding about the ongoing conflict and growing tension in the Middle East, let's revisit what we penned during the time of Russia's invasion of Ukraine:

"At times like these, we are reminded that while history doesn't repeat itself, it often rhymes:

In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.”

- Warren Buffet

This perspective frequently serves as a healthy reminder to investors that it is important to stay focused on longer-term outcomes."

Reflecting on the events over the last month and year, it's clear that maintaining such a perspective can be challenging. It's not our intention to downplay the gravity of the current situation or seem indifferent. However, historical data from previous conflicts suggests that this perspective has merit:

The psychology of investing often magnifies today’s current challenges, suggesting there's little room for optimism. The constant flood of negative headlines paired with increasing market volatility seems more the rule than the exception, particularly in our tightly interconnected world. This "recency bias" skews perception, even though turbulent markets are a regular part of the investing landscape. Since 1950, the S&P 500 has averaged a -13.7% intra-year drop, yet despite these challenges, it consistently demonstrates the ability to yield a positive yearly outcome. These market cycles are not new. Despite the present uncertainties, from policy shifts to global events, our approach remains cautiously steady. It's essential to remember that rapid market rallies can occur unexpectedly, underscoring the importance of staying aligned with long-term investment strategies and remaining prepared for all market conditions.

If you'd like to discuss your portfolios, the current market landscape, or review your financial plans, please don't hesitate to reach out to our team and set up a time to chat.


- Jack

Beyond the Surface: GICs vs. The Market in a Volatile Era

Amid the ever-fluctuating world of investments, Guaranteed Investment Certificates (GICs) often emerge as a beacon of stability. Their allure is magnified today, with GIC rates being some of the best we've seen in years. Such enticing rates make them an attractive option for those eyeing short-term financial goals or for investors looking to bring a degree of stability to their portfolios.

However, delving deeper into the true returns of GICs tells a slightly different story. Once we adjust for real-world variables like inflation and tax implications, the sheen of GICs can sometimes tarnish. Over extended periods, accounting for these factors GIC returns can be less than stellar, sometimes even negative. The promise of safety with GICs, especially from a longer-term perspective, might come with hidden costs - the subtle erosion of purchasing power:

Conversely, the stock market, despite its unpredictability, has historically demonstrated resilience. While it's not without its share of downturns, over extended periods, it has shown a consistent trend of outpacing inflation. Equities, with their potential for higher returns, often represent a brighter prospect for those willing to navigate the ebbs and flows of the market.

In sum, both cash and equities have their unique risks and rewards. While GICs might provide short-term security and specific strategic advantages, it's crucial to weigh their returns against the backdrop of real-world challenges like inflation. For those with a longer-term vision, the broader market, despite its inherent volatility, tends to offer a more favorable avenue for growth. However, for specific needs and timelines, GICs remain a relevant and valuable tool in the financial toolkit.

If you'd like to explore how GICs align with your investment strategy, we're here to help. Feel free to get in touch with the team.

Get your 2023 year-end tax-planning checklist:


As the end of the year approaches, it’s time to turn your attention to tax planning. This helpful checklist outlines important deadlines, opportunities and strategy considerations including:

  • Tax instalments
  • Tax-loss selling strategies
  • Income-splitting loan planning
  • TFSA and RRSP contributions and deadlines
  • Considerations for incorporated business owners
  • Charitable giving, including proposed changes to AMT; and much more

Ready to make the most of your 2023 tax strategy?

Visit our website to review the 2023 year-end tax-planning checklist.

Please contact the team if you have any

Spot Speaks! Boston Dynamics' Robot Dog Powered by OpenAI

Spot's latest antics are nothing short of uncanny. As the iconic robot dog from Boston Dynamics roams and converses with its human counterparts, we catch a glimpse of a future where such interactions might be the norm. While we're not quite at "The Jetsons" level with chatty robots like Rosey, the idea of a Spot guiding your next vacation tour isn't far-fetched. Intrigued? Dive into the video below and see for yourself!