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Market Commentary

June 2020 Update

The world breaks everyone and afterwards many are strong at the broken places. – Ernest Hemingway

I am pleased to report that as of the time of writing, the Growth Portfolio is now positive on a year to date basis, positive on a one year basis, and that all mandates continue to recover. Our stocks performed well in May, many continuing to reach new all-time highs. We took profits on some positions by reducing position sizes, ensuring an appropriate risk/reward ratio. Our cash balances remain substantial in the equity portfolios to reflect a more defensive positioning. As detailed in the accompanying video, I remain cautious even in the midst of the recovery narrative. When we see signs of a durable and sustainable recovery, the cash balances will be deployed into select stocks.

With global growth decelerating, coupled with massive liquidity injections, I expect that interest rates will continue to move lower, with the potential to record negative values in the future. Despite central bank and government efforts to stimulate economies, monetary velocity ( continues to fall, supporting this view. This points to a favourable opportunity in high quality bonds, which we own in the Income Portfolio.

Financial Planning
One insight gleaned from live spending data is that the Boomer age cohort is out-saving Millennials. With some Boomers now considering early retirement, and others reining in lifestyle expenses, unique opportunities are presenting for inter-generational wealth plans, including family businesses and estate protection. Focusing on tax minimization has been a key topic. If you have questions about your particular plan or would like to review with the team here, please be in touch.

Recommended reading
An insightful interview with billionaire investor Sam Zell

An interview with Dr Lacy Hunt (one of the best track records in bond investing)

A good article on deflation and policy implications


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