15 | | durhamregion.com | This Week | Thursday, December 1, 2022 | Do you want to know the best place to look for reliable information on the stock market? The answer is simple. Look to the stock market. The reason is buyers and sellers come together to trade a stock. Both sides to the transaction must be satisfied and agree on a price; otherwise, no trade would be made. That sale price can be your best proxy to the value of a stock. That answers the first question many investors have: What is a stock worth? The second question is what amount of return should you expect if you hold a strongly diversified portfolio? Again we will look to the market. Since 1926, the average annual return of the stock portfolio is 10 per cent. This information is based on the S&P 500 Index that tracks 500 U.S. large companies. The return for individual investors over that period is reduced by any management fees and trading costs incurred. In order to be realistic with your expectations as to potential future returns, a couple of things should be considered. Stock returns are not consistent. About every one in four years, stock market values decreased. Plain and simple, that's how the stock market works. Our recommendation is to accept this reality. Peter Watson is registered with Aligned Capital Partners Inc. (ACPI) to provide investment advice. Investment products are provided by ACPI. ACPI is a member of the Investment Industry Regulatory Organization of Canada. The opinions expressed are those of the author and not necessarily those of ACPI. Only investment-related products and services are offered through Watson Securities of ACPI. Watson provides wealth management services through Watson Investments. He can be reached at www.watsoninvestments.com. STOCK MARKET CAN PROVIDE USEFUL INVESTING INSIGHTS PETER WATSON Column OPINION There's a reason why the ups and downs of the stock market can leave you depressed. It has to do with human behaviour. Investors value gains and losses differently. A loss has more significance to an investor than a gain of an equal amount. For example, if for one month your portfolio increases in value for half the days and decreases in value by the same amount for the other half, thenfor the other half, thenf nothing has changed. But emotionally you have suffered because the days your portfolio declines in value are difficult on you emotionally. Understanding emotional behaviour has become an important part of understanding human behaviour when we invest. Prof. Daniel Kahneman, a psychology professor at Princeton University, won the Nobel Memorial Prize in Economic Sciences in 2002 for his contribution to behavioural economics. His research includes the "loss aversion theory." That is the basis of what is described in this column. How can this understanding assist us with investing? We should appreciateWe should appreciateW that we are subject to emotional reactions when investing. It can prepare you for the times your nerves might be on edge during a volatile or declining market. That won't necessarily dictate how you react during volatile times, but hopefully it would inform any decisions you make. Peter Watson is registered with Aligned Capital Partners Inc. (ACPI) to provide investment advice. Investment products are provided by ACPI. ACPI is a member of the Investment Industry Regulatory Organization of Canada. The opinions expressed are those of the author and not necessarily those of ACPI. Only investment-related products and services are offered through Watson Securities of ACPI. Watson provides wealth management services through Watson Investments. He can be reached at www.watsoninvestments.com. STOCK MARKET VOLATILITY IS EMOTIONAL ROLLER-COASTER PETER WATSON Column The holiday season is around the corner and as the cost of living continues to soar, a new survey finds a majority of Canadians are worried about spending. A PayPal Canada survey found nearly seven in 10 Canadians would be too embarrassed to ask for financial help to split holiday costs. PayPal Canada's 2022 Holiday Snapshot Survey polled 2,000 Canadians on their festive season spending. The survey found 73 per cent of Canadians will avoid splurging on unnecessary presents, and instead will save up for the perfect gift for their loved ones. Hitting the road or boarding a plane for a holiday journey will also be limited this season, as only 36 per cent of Canadians plan to do so this year, found the survey. Holiday festivities will count fewer guests, while agreements on spending caps will be added to the invitation requirements. Three in 10 hosts will ask attendees to fill the dinner table by bringing dishes. The top reason people are unwilling to ask for help from friends and family for holiday spending is because 66 per cent feel others are also struggling financially. Other reasons people gave was to avoid worrying loved ones or having too much pride to ask for financial help. The survey found Gen Z members are most willing to split the cost of gifts, with two in five respondents offering to chip to split holiday costs with their parents and grandparents, who they feel would be too proud to ask for help. PayPal Canada says billsplitting with family and friends is happening online, and found one in three Canadians polled or 35 per cent say they plan to split costs using banking apps. "Canadians are feeling the squeeze with high inflation and runaway interest rates which adds to spending concerns during the holidays," said PayPal spokesperson Malini Mitra. "Nearly three out of five Canadian respondents (57%) feel anxious that the holidays won't be as good this year due to the cost-of-living crisis." A new survey finds that while most Canadians are anxious about holiday season spending, a large number polled admitted they are too embarrassed to ask for financial help. Richard Lautens/Toronto Star HALF OF CANADIANS PLAN TO MAKE CUTBACKS THIS HOLIDAY SEASON: PAYPAL CANADA SURVEY MONEY MATTERS SANTIAGO ARIAS OROZCO sariasorozco@thestar.ca