raises based on increases in the cost of living has a very non-volatile income and very little exposure to the oil & gas sector. Both should adjust the mix of investments in their retirement portfolios to manage the volatility of their overall wealth, not just the volatility of the value of their investment portfolios.
Natural Forces at Play in the Economy
Almost by definition, it is easier for a small company to grow than it is for a large company. Most of the products and services that will be consumed in the future will be produced by companies that are small and growing today or not yet even established. For example, Google was founded in 1996, went public in 2004, was added to the S&P 500 Index in March 2006 and is now the 15th largest company in the index. Point being, we wouldn’t even have been able to purchase Google stock 10 years ago, but it is now one of the largest companies in the world. Examples like this are abundant. The natural forces at play in the world’s economies mean that small companies collectively are almost assured to grow faster than large companies over the long-term. This is not just due to innovation, but agility, the ability to adapt to change and new, more efficient methods of organization and management. Similarly, large industries tend to grow slower than smaller industries. While oil & gas is a key sector in Canada, it isn’t likely to grow as quickly as other sectors in Canada, such as Consumer Discretionary or Information Technology (see here for S&P’s homepage for the