'Twas the week before Christmas...

‘Twas the week before Christmas
And Santa was near
Once again it was time
To reflect on the year

2016 began
With lots of frustration
Despite all the easing
Where was inflation?

Negative rates
Were a dominant theme
Touted as medicine—
But what would they mean?

Japan, in particular,
Tested them out
Driving rates lower
Despite market doubt

And turning to China
We just didn’t know
Given their headwinds
Could they still grow?

But somehow they managed
(As they usually do)
Big growth in credit
Helped them get through

Soon it was summer
And as a matter of course
More than half of Britons
Requested divorce

“We want to leave!”
Was the outcome of Brexit
But still to be seen:
How much pain from this exit?

And then in November
Was that special date
When Americans voted
To make themselves “Great”

At once the odds shifted
—from what we could tell—
Bond yields went higher
And the Peso? It fell

For the most part it seemed
Stocks didn’t care
And the world was left wondering:
Four years with that hair?

The critical lesson:
You don’t always know
In these kinds of moments
How things will go

At the start of the year
Who could have known
That Britain would leave
And no Clinton throne?

So now that we’ve come
To the end of the year
It’s the outlook for bonds
That the markets most fear

It’s timely to pause
And get some perspective
When markets go sour
Bonds are often protective

Moreover, so what
If we saw lots of change
Volatility itself
Isn’t that strange

Since 2009
Stocks have been on a run
So it’s natural this ride was
A little less fun

In the end, what matters
Is not being “right”
But a portfolio that lets you
Sleep easy at night

So to all of our readers,
Those far and those near,
Happy Holidays to you
And a joyful New Year.

Happy Holidays from everyone at Mawer Investment Management Ltd.!