The Psychology of Investing Ryan Nobbs, Investment Advisor BMO Nesbitt Burns
Market Historically Far Stronger with Democrat Presidents Average S&P 500 Gains since 1928 Democrat Republican 10,2% 1,1% Adminsitration Term S&P Returns Hoover 1929 1933-30,8% 1933 1937 32,2% Roosevelt 1937 1941-12,5% 1941 1945 6,2% Roosevelt/Truman 1945 1949 3,9% Truman 1949 1953 14,0% Eisenhower 1953 1957 14,2% 1957 1961 7,8% Kennedy/Johnson 1961 1965 9,6% Johnson 1965 1969 4,1% Nixon 1969 1973 3,8% Nixon/Ford 1973 1977-3,4% Carter 1977 1981 6,3% Reagan 1981 1985 7,4% 1985 1989 13,1% Bush 1989 1993 10,9% Clinton W. Bush Obama 1993 2001 2009 1997 2005 2013 15,7% -3,3% 11,6% 1997 2005 2013 2001 2009 2017 14,7% -9,0% 16,8%
Will America Be Great Again? Potential Economic Impact: o Tax Cuts o Infrastructure Spending o Less Regulation o Bigger Deficits o Protectionism o Higher Interest Rates? Republican sweep = No Gridlock in DC Source: BMO Capital Markets
The Bull Market is Poised to Continue (S&P 500) Source: Bloomberg 5
U.S. Market Has Massively Outperformed Since 2011 S&P 500 vs S&P/TSX Composite in Canadian dollar terms 230 210 190 170 150 130 110 90 70 50 Mar-11 Oct -11 May-12 Dec-12 Jul - 13 Feb-14 Sep-14 Apr-15 Nov-15 S&P 500 TSX Composite Source: BMO Private Client Research, Bloomberg 6
Market Corrections Are Not Uncommon
2016 Is No Different
The Importance of Staying Invested $1,100 $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 $0 Jul - 79 Aug-82 Sep-85 Oct -88 Nov-91 Dec-94 Jan-98 Feb-01 Mar-04 Apr-07 May-10 Jun-13 S&P/ TSX Composite Index S&P/ TSX Composite Index (without top 1% of days) Source: Bloomberg 9
Bonus Slide List of Defunct Car Companies 1935 Stout Scarab Source: Wikipedia 10
Bonus Slide List of Defunct Rail Companies Grand Trunk Locomotive - 1859 Source: Wikipedia 11
Bonus Slide Solar Power Index Performance since 2008 Ardour Solar Index Performance Source: Factset 12
BMO Still Favours Stocks Over Other Asset Classes BMO Nesbitt Burns Investment Strategy Committee s Recommended Asset Allocation (%) Income Balanced Growth Aggressive Growth Recommended Benchmark Recommended Benchmark Recommended Benchmark Recommended Benchmark Asset Mix Weights Asset Mix Weights Asset Mix Weights Asset Mix Weights Cash 5 5 5 5 5 5 0 5 Fixed Income 65 70 35 45 15 25 0 0 Equi t y 30 25 60 50 80 70 100 95 Canadian Equity 15 15 25 25 35 35 40 40 U.S. Equity 10 5 25 15 25 20 35 30 EAFE Equi t y 5* 5 5* 5 10* 10 15* 15 Emerging Equity 0 0 5 5 10 5 10 10 * Within EAFE, we specifically recommend Continental European equity. Source: BMO Nesbitt Burns Private Client Strategy Committee 13
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Disclosures Company Specific Disclosures For Important Disclosures on the stocks discussed in this report, please go to: http://researchglobal.bmocapitalmarkets.com/public/company_disclosure_public.aspx The authors of this report (or their household members) directly or beneficially own securities of this issuer: None. Ratings and Sector Key BMO Capital Markets uses the following ratings system definitions: OP = Outperform Forecast to outperform the analyst s coverage universe on a total return basis; Mkt = Market Perform Forecast to perform roughly in line with the analyst s coverage universe on a total return basis; Und = Underperform Forecast to underperform the analyst s coverage universe on a total return basis; (S) = speculative investment; NR = No rating at this time; R = Restricted Dissemination of research is currently restricted. Prior BMO Capital Markets Rating System (January 4, 2010 April 5, 2013): http://researchglobal.bmocapitalmarkets.com/documents/2013/prior_rating_system.pdf Other Important Disclosures For Other Important Disclosures on the stocks discussed in this report, please contact your BMO Nesbitt Burns Investment Advisor or go to http://researchglobal.bmocapitalmarkets.com/public/company_disclosure_public.aspx or write to Editorial Department, BMO Capital Markets, 3 Times Square, New York, NY 10036 or Editorial Department, BMO Capital Markets, 1 First Canadian Place, Toronto, Ontario, M5X 1H3. Technical Analysis Disclaimer Recommendations and opinions contained herein are based on Technical Analysis and do not necessarily reflect fundamental recommendations and opinions and may relate to companies which, in some instances, are not followed on a fundamental research basis. 15