Plus: You should buy a sports team December 5, 2022 Made in Canada IN THIS ISSUE Estimated read time: 7 min ❄️ Snowmobiles 🦇 Batman’s deal 🙏 Inflation makes us beg WHAT HAPPENED LAST WEEK Holy distribution deal, Batman! Legendary Entertainment, maker of The Dark Knight , is so over your blah home TV screen that it inked a new theatrical screening contract. | Warner Bros. THE WEEK IN MARKETS Markets continued to inch up in their holiday mini-rally this week, with the S&P returning roughly 1% and the TSX doing about 0.5%. Markets are up about 6% over the last month. What’s driving the move? For starters, there are signs that inflation may have peaked (oil prices are now below their pre-Ukraine war levels, and the U.S. and Canadian housing markets majorly cooled). In response, U.S. Fed Chair Jay Powell hinted that the U.S. central bank may slow its year-long rate-hike party. Even China took baby steps toward reopening — a giganto deal for trade and the world order. All this good news helped to push the TSX’s returns close to flat for the year (whereas total returns for the tech-heavy Nasdaq are -26% YTD). But! A pretty hot U.S. jobs report last week complicated the picture. Will Powell stick with his rate slowdown with the labour market still tight? By now you know the answer is: we’ll see! THE WEEK IN ONE NUMBER 1,112% The average increase in value of NHL teams since 1996, as pro sports teams of all stripes gradually became some of the world’s most coveted assets. IMPORTANT November’s job numbers rang the bell on a real boxing match of emotions. In this corner, where our hopes for a soft landing are gathered: Canada added fewer new jobs than last month. Sounds counterintuitive to root against workers, but this is a sign rate hikes may be working and could end soon. But in that corner: the U.S. saw surprising gains in both jobs and wages. As good as that sounds, it could mean the hikes weren’t enough, making it harder for Powell to slow down. Chinese protesters saw red; the markets saw green. Beijing’s National Health Commission pledged to ease lockdowns “as quickly as possible” in response to last week’s demonstrations. This buoyed Chinese stocks and the stocks of companies around the world doing business there. INTERESTING The biggest bank in Canada might get even bigger. In the second-most newsworthy combination of the week, Royal Bank of Canada agreed to acquire HSBC’s Canadian operations for $13.5 billion. There are plenty of hurdles to clear, but if the deal does go through, that would mean further consolidation of a financial sector where six lenders already control 80% of the assets. Still more competitive than telecom! If the economy collapses, at least we’ll all have snowmobiles. Bombardier Recreational Products, the Quebec-based owner of snow- and water-rocket brands Ski-Doo and Sea-Doo, reported its best quarter ever after shovelling in $238 million. The Batman hates The Streaming. After splitting with Warner Brothers, Legendary Entertainment (the production company behind big-budget films like Dune and The Dark Knight) announced a new multi-year deal with Sony — who promised never to cut into their box-office hauls by making them simultaneously premiere movies on a streaming service. And not just because they don’t own one. What the truck was that? Musk put down the matches at Twitter long enough to announce delivery of the first Tesla Semi (and probably thumb his nose at longtime doubter Bill Gates). THE FOMO INDEX by Stacey Woods IMPORTANT 😷 Chinese TV limits shots of maskless crowds at World Cup so its people don’t yearn for the freedoms of Qatar. Source ⚠️ U.S. tax filing sites busted for sending people’s info to Facebook, which might be bad if anyone still used Facebook. Source 💧 Don’t go in there for a while: Hamilton fixes leak that’s dumped raw sewage into Lake Ontario for 26 years. Source 🐵 “... and that’s why we still have apes. Love, Charles.” All of Darwin’s correspondence is now available online. Source CRASH & BURN TO THE MOON 😩 You were right, mom. World’s largest Pokémon collection fails to sell at auction. Source 💸 Kimye finalize divorce. He’ll pay $268k a month child support, which should cover a small portion of their therapy. Source 👍 Canadians made 40% fewer complaints about their internet service this year. Could’ve been 100% if they’d just restarted the router. Source 🐦 Twitter launching new gold and grey checks that still don’t mean you’re famous. Source WHO CARES FROM OUR SPONSOR Auto-Investments are Foolproof 💰 We know, because we write about it all the time: trying to time the market doesn’t work. The good news is that the smartest way to invest is also the easiest: automate it. Turn on auto-investing in your Wealthsimple app and take the guesswork (and dumb decisions) out of the equation. Set up auto-deposits WHAT’S UP THIS WEEK Team Macklem meets for the last time this year (Wednesday). Investors are betting on a comparatively tiny 0.25% hike after those weak job numbers. We’re on the edge of our still-8%-more-expensive-than-last-year seats. Dollarama reports Q3 earnings (Thursday). Last quarter thrifty shoppers spent $1.22 billion at the discount retailer. And it’s not like the world’s gotten any better. THE BIG IMPORTANT STORY STOCKS How Long Is This Bear Market Going to Last? (A Recovery Explainer) You know the story by now: this year the major stock indices got crushed (thanks to interest-rate hikes) and have tried several times to rally — most notably this summer, before the indices sank to their lowest levels of the year. Bummer. Well, now stocks are rallying again, with TSX returns almost climbing out of negative territory. So the big question is: Is this the rally that will stick and lead to a real, honest-to-God recovery? Or is this just another bear-market rally? It’s hard to say! It’s usually clear only in retrospect when a recovery begins. But we thought it would be a good time to go through five common questions about recoveries, like: When and how do they start? And when should I start investing again? That way, you won’t be entirely unprepared if this rally is the rally. Or if it’s not. First, the basics: What’s a market bottom and what’s a recovery? Market bottom is a downturn’s lowest point before stocks climb and surpass their pre-fall levels. That’s why, after a big drop, people on Twitter ask, So, have we seen the bottom? Well, as we’ve learned this year, it’s notoriously hard to call the bottom, thanks to bear-market rallies, which occur when stocks rise during a downturn before diving even lower. That happened this summer, as we mentioned, and it could be what’s happening now. How long does a recovery normally take? It varies. A lot! The U.S. stock market took 17 years to recover in real terms from the late ’60s crash. Nowadays, though, the S&P 500 usually takes about three years to fully recover, but it has done it in as little as four months. More encouraging, perhaps, is that bear markets — when stocks fall 20% or more from their recent highs — tend to last only about twelve months. The S&P officially entered a bear market in June and is already up about 14% from its October low; at last check, it sat -15% YTD. But a bear-market rally of this size is not unusual. What needs to happen to start a recovery? The stock market seems to be in a cyclical downturn, meaning the economy overheated, inflation rose, and central banks raised rates in response. Cyclical downturns end whenever central banks start cutting rates, which encourages borrowing and fuels growth. That helps to explain why stocks have risen a bit: last week, the Fed hinted that it probably won’t keep raising rates as aggressively as it has been. So … what should the average, normie investor do? Investing right after a downturn can yield some of your best returns. But trying to time the market is tough sledding. Even pros don’t effectively find the exact bottom. For average investors, one strategy is to take the long view and consistently invest in a low-cost diversified portfolio no matter what’s happening in the markets. That’s because regularly investing exposes you to a bunch of different prices, which reduces the stress of picking the exact right time to invest. Which, like we said, is tough. Whatever you decide to do, keep in mind that you’re absolutely guaranteed to experience bear markets throughout your life, and if history has taught us anything it’s that it would be a mistake to take your money out of the market for a long, long time. Read more: Nine Ways to Be Smart When the Market Goes Down SHARE TLDR WITH FRIENDS 🤝 Put this link in your group chats, in your Slack threads, on a tattoo on your back — whatever works for you! LAST WEEK IN FEEDBACK In our recap of Cargill’s decision to double-down on its meat packing business, we made up a silly term for slaughtering meat: cowicide. (The runner-up? Moo-urder.) We thought it was fun, probably less opinionated than "slaughter" — and of course, a great way to avoid repeating the same word a bunch of times. Still, some people objected: “The comments on Cargill are ridiculous and obviously written by a petulant child.” “Do better. The anti-meat comments are uncalled for.” We appreciate the feedback. For the record: we have no anti-meat agenda. We have no pro-meat agenda, either! We do have one vegetarian, but he's only occasionally annoying about it. And he lets us call it inplanticide. OTHER VERY GOOD READS 🤫 Could I Survive the ‘Quietest Place on Earth’?* So quiet, you can hear your blood flowing | The New York Times 🥖 Could a Grocer Code of Conduct Help Rising Food Prices? Suppliers hammer out guidelines to boost transparency | The Walrus 👾 The Untold Story Behind Emax The cryptocurrency Kim Kardashian got busted for hyping | Forbes *Article is paywalled, which, yeah, is kind of annoying. But we think good journalism is worth paying for. THE WISDOM OF TWITTER If you have kids, there’s also at least one Disney princess in this mix. THOUGHTS ON TODAY’S ISSUE? Love it Good So so This week’s newsletter contributors: Jared Lindzon (writer), Devin Gordon (writer), Stacey Woods (writer), Sarah Rieger (news writer), Ambrose Martos (fact checker), Sara Black McCulloch (fact checker), Jared Sullivan (senior editor), Peter Martin (senior editor), Kat Angus (managing editor), and Devin Friedman (editor-in-chief). Wealthsimple Media Inc. 80 Spadina Ave Suite 400 Toronto, ON, M5V 2J4 Replies to this email address are not monitored. Have questions? Visit our Help Centre or submit a request to our Client Support team. VIEW IN BROWSER PRIVACY POLICY UNSUBSCRIBE TLDR is offered by Wealthsimple Media Inc. and is for informational purposes only. Any views expressed are those of the individual author and/or of Wealthsimple Media Inc., not of Wealthsimple Financial Corp or any of its other subsidiaries or affiliates. The content in TLDR is not investment advice, a recommendation to buy or sell assets or securities, nor any other kind of professional advice. TLDR is not a research report and should not serve as the basis for making investment decisions. Wealthsimple Media Inc. does not endorse any third-party views referenced in this content. When you invest, your money is at risk and it is possible that you may lose some or all of your investment. Past performance is not a guarantee of future results. Historical returns, hypothetical returns, expected returns and images included in this content are for illustrative purposes only. Always research before investing. © 2022 Wealthsimple Media Inc.