Goodreid Blog

Trust The Math

February 12, 2016

Market corrections are uncomfortable.   Investors’ emotional responses are rooted in the worry that a catastrophe will occur.  Our companies go bankrupt. Stock prices go down and STAY DOWN…or become worthless.

The plain truth is that there is no basis for this happening.  Stocks are not priced in a vacuum.  Simply stated, the more money companies generate and the faster they grow, the more they are worth.

So let’s take a big picture view.  We know that the worth of the economy is the sum of the value of goods and services produced.  It is made up of thousands of companies.  Twenty-five years ago the value of the U.S. Gross Domestic Product was $6 trillion.  By 2005 that number had grown to $13 trillion and it now stands at $18 trillion.  Corporate profits grew alongside, from $265 billion in 1990 to $1.8 trillion today.

The question to ask during these times is not whether equity markets are vulnerable over the short term. They are. The question to ask is how large the economy is going to be in 5, 10, or 30 years? And how great will corporate profits be as a beneficiary of the larger economy? 

Making decisions based on the short term price action of the equity market puts our wealth in jeopardy. Focussing on the long term, in our experience, is the best path toward wealth creation.

Gordon Reid

President & CEO

Gordon Reid, President and CEO of Goodreid Investment Counsel Corp., entered the financial services business in 1985 and co-founded Goodreid Investment Strategy, one of Canada's first fully discretionary "high net worth" wrap accounts.

See Biography

Other Posts

The Financial Post: These tax-loss selling targets are also table-pounding buys

23 November, 2023

As we approach year-end, many investors are turning their attention to tax-loss selling, the strategy of selling investments that have experienced a loss in order to offset capital gains and potentially reduce an investor’s tax liability.

Read More

The Financial Post: Banks are taking it on the chin, but here’s why they deserve a second look

26 October, 2023

Canadian banks have long been considered a solid investment choice for a variety of reasons, but perhaps the best thing they have going for them is the oligopolistic nature of the industry. The Big Six — namely Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Bank…

Read More

The Financial Post: Just as in baseball, investors can do better by waiting for the perfect pitch

28 September, 2023

Major League Baseball playoffs have arrived, and the best teams will duel it out to be crowned world champions for another year. While history will undoubtedly be made, with exciting walk-offs and bitter disappointments on tap, one thing is and has always been true: hitting a baseball…

Read More

The Globe and Mail: Dividend investing works wonders - and now’s a great time to start with these three stocks

29 August, 2023

When it comes to investing in a diversified portfolio of Canadian equities, there are usually two choices: a total return Canadian equity portfolio, or a Canadian equity dividend portfolio that generates considerably higher income.

Read More

The Globe and Mail: Why this money manager thinks Canada is the best place to invest over the U.S. right now

12 May, 2023

While many investors look around the world for the best places to invest, money manager Robert Gill believes some of the best bets are at home in Canada, especially now. Mr. Gill, senior vice president and Canadian portfolio manager at Goodreid Investment Counsel Corp. in Toronto,…

Read More

The Globe and Mail: What is Topicus and why it’s a stock pick among our Investing Club members

03 May, 2023

Years ago I was fortunate enough to be invited to Omaha, Neb., to have lunch with Warren Buffett. As Warren sat down beside me at Gorat’s, his favourite steakhouse, I was bursting with questions. After a brief introduction, I asked, “What advice would you offer a young person starting…

Read More