Value Of Advice

Now that the markets have bounced back and investor nerves are calmed, we can finally write about something less market / economic centric. Given the big market drop in Q4 and the big recovery in January, we wanted to emphasize the importance of staying invested and how going down [...]

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Predictably Unpredictable

Earnings With just over 100 companies reported so far in the U.S. and the bulk of the Canadian earnings season just around the corner, we thought it fitting to have a look at how the season is progressing and what it’s all about. Earnings are the beating heart of valuation [...]

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How Cheap It Is

Just a heads up: we will soon be publishing our Market Outlook for 2019 and beyond, entitled “Punch bowl hangover”. In the report, we provide a recap of 2018, a bull vs bear comparison for 2019, our baseline scenario, how we are positioned and a refresh on the Canadian [...]

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Whatever You Do, Don’t Look Now!

What a week for the markets. As fears that the world’s two largest economies would continue to escalate their trade war subsided, we began our week thinking the worst was behind us. Our expectations were shattered on Tuesday when the S&P 500 took a nose dive, falling as much [...]

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There Is Value Out There

On January 1 of this year, the S&P 500 had just completed 2017 which enjoyed record operating earnings of $124.50. With just one quarter to go, if current estimates hold for the final quarter, the S&P 500 will set another record of $157.70 in earnings for 2018, an increase [...]

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Market Cycle: Good But Getting Skinny

Market cycles don’t die of old age, and that is good news as this cycle can only be described as being “rather mature”. Just a reminder, we do not view the market cycle in terms of bull and bear markets for a specific index (otherwise one could argue the Canadian [...]

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As Facts Change, So Do Our Views

We have been long-time proponents of rising rates, that equity portfolios should be tilted heavily toward cyclical yield and limit exposure to interest rate sensitive companies. Cyclical yield companies are more sensitive to economic activity, meaning if yields are moving higher due to better economic data, they react more [...]

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The Anatomy Of A Bubble Revisited: How High?

We believe three factors drive stock prices: fundamentals, technical analysis and human behaviour (market psychology). Fundamentals tend to play out and are the driving force of long-term results, technical analysis can help you manage the turn, but flow in human behaviour can dominate all else and drive prices far [...]

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Style Drift & The Rise Of The Generalist

When starting in the investment industry a few decades back, style investing was rapidly rising in popularity. Growth and value were the most prominent but now there are many more varieties of investment “styles” including momentum, size and dividends, just to mention a few. Another term that became pertinent [...]

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Bear Beta

The S&P 500 has just about completed its best reporting season in a heck of a long time, with growth in earnings of 25% and sales of 10%. It’s hard to complain. Not to be outdone, the TSX is on track to post 20% earnings growth and 16% sales [...]

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Countering Investor Behavioural Biases

What is a bias? While the word certainly carries a negative connotation, it is essentially a preconceived opinion or feeling. Sometimes these opinions are based on accurate, objective and balanced information. Other times, they are based on inaccurate or isolated information. [REITs] Q2 hedge fund letters, conference, scoops etc Our minds create biases [...]

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Countering Advisor Behavioural Biases

In an ideal world, any important decision we make in life would go through a rigorous and disciplined process, designed to lead us to the answer most likely to be correct or of greatest probability weighted benefit. This would include assessing all potential options available, the potential outcomes of [...]

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Does The Market Overreact?

Anecdotally, most market practitioners and investors likely believe that the market often overreacts to news. This happens often around earnings announcements, when a company surprises to either the upside or downside and the share price reacts materially. Q1 hedge fund letters, conference, scoops etc, Also read Lear Capital: Financial Products [...]

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What Happens The The Treasury Yield At 3.0%?

The U.S. 10-year Treasury is yielding 2.93% (noon April 20) and after a brief reprieve, appears to be rising once again nearing the 3.0% level. Now a number of market chatters have pointed to 3% as a critical threshold, from a resistance level and for a potential negative feedback [...]

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The Million Dollar Question

All you really need to know is whether or not there will be a recession in the next six months. Ok, that is an exaggeration but bear with us. Since about 1950, the average monthly return for the S&P 500 is about 0.7%. What Is Next After Libor Explained That works [...]

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O Canada – Cracks In The Foundation Are Widening

Canadian houses have caught the eye of global investors following decades of consistent growth and all but a slight decline during the great recession. Then as home prices started catching fire, foreign money started pouring in, leading to provincial governments in British Columbia and Ontario to step in to [...]

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