The real voyage of discovery consists not in seeking new landscapes but in having new eyes. – Marcel Proust
It is the emptiness within the cup that makes it useful. – Lao-tzu
Markets
Value stocks continued their march higher in December, granting the Growth Portfolio another one of its best months on record. Our other Portfolios also performed well. After what turned out to be a rather long dry spell for value investing in general, we’re now flush with opportunity and strength. There is no great mystery here, this is how the cyclicality of investing goes – times of want are followed by times of plenty. I believe this is the “return of value investing” that we’ve been so patiently awaiting. With history as our guide, value recoveries tend to be lasting, multi-year episodes, featuring particularly strong price appreciation. Our patience, faithfulness and perseverance is coming into a time of reward.
Financial Planning
It is true the majority of Canadians should consider making RSP contributions in the first 60 days of 2020. But somewhat surprisingly, for a minority of wealthy Canadians RSP contributions do no help at all. This is the case if you end up in a high tax bracket at the time of RIF withdrawals. In such a case it may make sense to collapse the RSP or RIF early, but only under the guidance of a fully formed financial plan and advice from your accountant. This is especially the case for large RIFs, which can easily translate into large estate values subject to income tax. Our clients with wealth plans can rest easy, while any readers of this note without our good advice should be in touch to help reduce an unexpected tax burden.
The opinions contained herein are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Wellington-Altus Private Wealth. Assumptions, opinions and information constitute the author’s judgement as of the date this material and subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Graphs and charts are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. All third party products and services referred to or advertised in this presentation are sold by the company or organization named. While these products or services may serve as valuable aids to the independent investor, WAPW does not specifically endorse any of these products or services. The third party products and services referred to, or advertised in this presentation, are available as a convenience to its customers only, and WAPW is not liable for any claims, losses or damages however arising out of any purchase or use of third party products or services. All insurance products and services are offered by life licensed advisors of Wellington-Altus. Wellington-Altus Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. All trademarks are the property of their respective owners.
Market Commentary
December 2019 Update
The real voyage of discovery consists not in seeking new landscapes but in having new eyes. – Marcel Proust
It is the emptiness within the cup that makes it useful. – Lao-tzu
Markets
Value stocks continued their march higher in December, granting the Growth Portfolio another one of its best months on record. Our other Portfolios also performed well. After what turned out to be a rather long dry spell for value investing in general, we’re now flush with opportunity and strength. There is no great mystery here, this is how the cyclicality of investing goes – times of want are followed by times of plenty. I believe this is the “return of value investing” that we’ve been so patiently awaiting. With history as our guide, value recoveries tend to be lasting, multi-year episodes, featuring particularly strong price appreciation. Our patience, faithfulness and perseverance is coming into a time of reward.
Financial Planning
It is true the majority of Canadians should consider making RSP contributions in the first 60 days of 2020. But somewhat surprisingly, for a minority of wealthy Canadians RSP contributions do no help at all. This is the case if you end up in a high tax bracket at the time of RIF withdrawals. In such a case it may make sense to collapse the RSP or RIF early, but only under the guidance of a fully formed financial plan and advice from your accountant. This is especially the case for large RIFs, which can easily translate into large estate values subject to income tax. Our clients with wealth plans can rest easy, while any readers of this note without our good advice should be in touch to help reduce an unexpected tax burden.
Recommended reading
An interesting study of European value stocks https://www.starcapital.de/fileadmin/user_upload/files/publikationen/Kapitalmarktforschung/2019-11_End_of_Value_premium.pdf
Elastic thinking helps better judgment https://fs.blog/2019/11/elastic-flexible-thinking/
The behavioural psychology explaining why checking your investment performance too often can lead to bad decisions https://www.betterment.com/resources/reduce-stress-investing/
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The opinions contained herein are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Wellington-Altus Private Wealth. Assumptions, opinions and information constitute the author’s judgement as of the date this material and subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Graphs and charts are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. All third party products and services referred to or advertised in this presentation are sold by the company or organization named. While these products or services may serve as valuable aids to the independent investor, WAPW does not specifically endorse any of these products or services. The third party products and services referred to, or advertised in this presentation, are available as a convenience to its customers only, and WAPW is not liable for any claims, losses or damages however arising out of any purchase or use of third party products or services. All insurance products and services are offered by life licensed advisors of Wellington-Altus. Wellington-Altus Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. All trademarks are the property of their respective owners.