Economists now estimate that interest rates in Canada are likely to remain at the near-zero bound for the next few years, until at least 2023, and the Bank of Canada has stated so in recent communications. This move by central banks around the world to keep interest rates at this lower for longer level has driven a stock market rally that has allowed investors and retirees to sleep tight.
With interest rates likely to stay anchored at a very low level, investors can expect that stock market returns will likely remain elevated for some time. Stocks are now being valued at higher levels due to the reduction in the risk-free rate related to aforementioned central bank stimulus, and are likely to continue to remain at higher valuations for some time to come.
This means that investors ought to remain patient with their holdings, despite perhaps wanting to take money off the table right now in the form of profits. Yes, valuations are near all-time highs based on many metrics. Yes, stocks are not cheap right now and the “buy-low, sell-high” mentality may want to come into play.
That said, there simply aren’t other places individual or institutional investors can put their money to gain any sort of reasonable return right now. Patience is the key to investing, so staying invested with one’s head down through the volatility that may be on the horizon is likely the best move for long-term focused investors.
Invest wisely, my friends.
