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


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

Elastic thinking helps better judgment

The behavioural psychology explaining why checking your investment performance too often can lead to bad decisions

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