The model portfolios are off to a strong start in January, with Growth up 6.57%, Income up 1.81%, American Growth up 10.62% and Small Cap up 3.94% as of the date of writing, January 24.
Incoming data continue to support our thesis that a new bull market in stocks is underway. Our proprietary indicators signaled an exhaustion in negative sentiment months ago, and now in January we received further confirmation of a bullish change in trading. We saw the number of stocks making new highs solidly outpace those making new lows, a large increase in call option trading, and various other proprietary sentiment measures turn strongly higher.
The economy continues to perform well and sail past the many calls for recession, which we first noted as our base case over six months ago. With inflation now falling and even turning into deflation (falling prices) in some goods and services, a “deflationary boom” is not out of the question. A deflationary boom is a rare period of economic growth accompanied by a decline in prices. In a deflationary boom, falling prices stimulate consumer spending, as they can buy more goods and services for their money. We’ll also note the uptick in the US with respect to new mortgage applications and the sale of new homes, that in the past has served as a reliable leading indicator of economic growth.
With this newfound optimism catching on, we think markets could go to much higher levels. The trend remains up, and we continue to find compelling investment opportunities for income and growth.
Model Portfolio Highlights
Growth Portfolio
In January we purchased shares of Netflix CDRs (ahead of the company’s glowing earnings report). First we’ll cover Netflix, then the “CDR” part… We see an opportunity here to own a solid business with growing revenues, growing cashflow and a growing subscriber base. The stock dropped over 71% from Nov 2021 highs into a bottom last May, and has been recovering higher since then in a very strong uptrend. The stock bottomed well ahead of the market (May vs Oct), a sign of NFLX’s strength from deeply-oversold conditions. We think the shares could easily retake their old highs and keep growing over time.
CDR stands for “Canadian Depository Receipt”. The Netflix CDR is backed by CIBC and is designed to track the performance 1:1 of Netflix common stock. The key difference is that the Netflix CDR is traded in Canadian dollars on a Canadian stock exchange, and comes with a currency hedge. So we get all the performance of Netflix stock, but without the currency exposure to USD. We see this as a positive, as we presently favour the Canadian dollar.
American Growth Portfolio
In January, we bought the common shares of Netflix in USD, for the reasons outlined above.
Income Portfolio
In January we increased exposure to global infrastructure companies. Global infrastructure has regained a strong uptrend that we expect should carry over into the months ahead. The global diversification added by this holding helps balance the portfolio’s return not just from global stock performance, but also in respect to global currencies.
Small Cap Portfolio
In January we took a profit on Clairvest and reduced our size in KP Tissue to purchase new positions including Canada Goose and New Flyer Industries. Both stocks have gone through the wringer over the past several years and provide what we believe is an exceptionally cheap entry point for growing businesses.
Across all portfolios we look for mispriced opportunities, considering only those with a significant margin of safety and minimal risk of permanent capital loss. After identifying such opportunities, patience is the most important factor in realizing our expected long term return.
If you have any questions about your portfolio, financial planning or investments please be in touch. If you’d like to add a friend or family to this email list, please let me know. Click to book a meeting: https://calendly.com/bwk-wapw
Thank you.
Yours,
Ben
Ben W. Kizemchuk
Portfolio Manager & Investment Advisor
Wellington-Altus Private Wealth
Office: 416.369.3024
Email: bwk@wellington-altus.ca
Book a meeting
Ben Kizemchuk offers full-service wealth management for high-net-worth Canadians including families, business owners, and successful professionals. Ben and his team provide investment advice, financial planning, tax minimization strategies, and retirement planning.
Market Commentary
February 2023 Update
The model portfolios are off to a strong start in January, with Growth up 6.57%, Income up 1.81%, American Growth up 10.62% and Small Cap up 3.94% as of the date of writing, January 24.
Incoming data continue to support our thesis that a new bull market in stocks is underway. Our proprietary indicators signaled an exhaustion in negative sentiment months ago, and now in January we received further confirmation of a bullish change in trading. We saw the number of stocks making new highs solidly outpace those making new lows, a large increase in call option trading, and various other proprietary sentiment measures turn strongly higher.
The economy continues to perform well and sail past the many calls for recession, which we first noted as our base case over six months ago. With inflation now falling and even turning into deflation (falling prices) in some goods and services, a “deflationary boom” is not out of the question. A deflationary boom is a rare period of economic growth accompanied by a decline in prices. In a deflationary boom, falling prices stimulate consumer spending, as they can buy more goods and services for their money. We’ll also note the uptick in the US with respect to new mortgage applications and the sale of new homes, that in the past has served as a reliable leading indicator of economic growth.
With this newfound optimism catching on, we think markets could go to much higher levels. The trend remains up, and we continue to find compelling investment opportunities for income and growth.
Model Portfolio Highlights
Growth Portfolio
In January we purchased shares of Netflix CDRs (ahead of the company’s glowing earnings report). First we’ll cover Netflix, then the “CDR” part… We see an opportunity here to own a solid business with growing revenues, growing cashflow and a growing subscriber base. The stock dropped over 71% from Nov 2021 highs into a bottom last May, and has been recovering higher since then in a very strong uptrend. The stock bottomed well ahead of the market (May vs Oct), a sign of NFLX’s strength from deeply-oversold conditions. We think the shares could easily retake their old highs and keep growing over time.
CDR stands for “Canadian Depository Receipt”. The Netflix CDR is backed by CIBC and is designed to track the performance 1:1 of Netflix common stock. The key difference is that the Netflix CDR is traded in Canadian dollars on a Canadian stock exchange, and comes with a currency hedge. So we get all the performance of Netflix stock, but without the currency exposure to USD. We see this as a positive, as we presently favour the Canadian dollar.
American Growth Portfolio
In January, we bought the common shares of Netflix in USD, for the reasons outlined above.
Income Portfolio
In January we increased exposure to global infrastructure companies. Global infrastructure has regained a strong uptrend that we expect should carry over into the months ahead. The global diversification added by this holding helps balance the portfolio’s return not just from global stock performance, but also in respect to global currencies.
Small Cap Portfolio
In January we took a profit on Clairvest and reduced our size in KP Tissue to purchase new positions including Canada Goose and New Flyer Industries. Both stocks have gone through the wringer over the past several years and provide what we believe is an exceptionally cheap entry point for growing businesses.
Across all portfolios we look for mispriced opportunities, considering only those with a significant margin of safety and minimal risk of permanent capital loss. After identifying such opportunities, patience is the most important factor in realizing our expected long term return.
If you have any questions about your portfolio, financial planning or investments please be in touch. If you’d like to add a friend or family to this email list, please let me know. Click to book a meeting: https://calendly.com/bwk-wapw
Thank you.
Yours,
Ben
Ben W. Kizemchuk
Portfolio Manager & Investment Advisor
Wellington-Altus Private Wealth
Office: 416.369.3024
Email: bwk@wellington-altus.ca
Book a meeting
Ben Kizemchuk offers full-service wealth management for high-net-worth Canadians including families, business owners, and successful professionals. Ben and his team provide investment advice, financial planning, tax minimization strategies, and retirement planning.
Recent Posts
April 2024 Update
Join the mailing list here Throughout March, stocks continued their upward trajectory, with many of
March 2024 Update
Join the mailing list here February continued the market’s winning streak, seeing a fresh round
February 2024 Update
Join the mailing list here In January, stocks maintained their upward momentum, with many of
January 2024 Update
Join the mailing list here December was another strong month for stocks, propelling U.S. indices and
December 2023 Update
Join the mailing list here After some months of disappointing returns, the much-awaited spark in
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.