The world breaks everyone and afterwards many are strong at the broken places. – Ernest Hemingway
Markets 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 (https://www.investopedia.com/terms/v/velocity.asp) 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.
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
June 2020 Update
The world breaks everyone and afterwards many are strong at the broken places. – Ernest Hemingway
Markets
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 (https://www.investopedia.com/terms/v/velocity.asp) 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 https://www.youtube.com/watch?v=tR9qd65EBnc
An interview with Dr Lacy Hunt (one of the best track records in bond investing) https://www.macrovoices.com/838-macrovoices-217-dr-lacy-hunt-the-road-through-deflation-toward-eventual-hyperinflation
A good article on deflation and policy implications https://foreignpolicy.com/2020/04/29/federal-reserve-global-economy-coronavirus-pandemic-inflation-terminal-deflation-is-coming/
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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.