Join the mailing list here
Despite stocks finishing lower in February, incoming data continue to support our case for an emergent bull market. In late September our proprietary indicators showed an exhaustion in negative sentiment, signaling a bottom in stocks was at hand. In January we observed the typical signals that usually arrive soon after major stock market bottoms. Now in February we saw several late-stage signals, which in our view have solidified a new bull market. Of these signals, the strongest is called the Golden Cross.
The Golden Cross happens when a shorter-term average of stock prices crosses above a longer term average, signifying a positive change in the short-term trend. If we look at the S&P 500 going back to 1900, and examine the first instance of seeing our version of the Golden Cross after stocks have already fallen at least 20%, some eye-popping statistics emerge. First, we should note the signal is extremely rare, occurring only 11 times since 1900. Three months after the signal, the average gain in stock prices is 5.1%, with a positive result 73% of the time. Six months later the average gain is 9.4%, with a positive result 82% of the time. And twelve months later, the average gain is 21.6%, with a positive result 91% of the time. When it comes to market statistics, this is about as good as it gets.
From a fundamental perspective, we believe economic data is supportive of a new bull market. Inflation continues to recede, economic growth is positive, employment is strong, real income is rising, consumer spending is strong, Wall St analysts are now raising 2023 earnings estimates, the Bank of Canada has affirmed a pause on rate increases, and the Fed has pledged to slow their pace of future rate hikes. This all looks like the calm after the storm.
Our base case is that markets can make significant gains in 2023, and new highs for the S&P 500, the Nasdaq, and TSX are not out of the question. The trend is up, and we continue to find compelling investment opportunities for income and growth.
Model Portfolio Highlights
Growth Portfolio
In February we took some profits on existing positions to purchase shares of three new companies, Chartwell Retirement Residences, Lightspeed, and Blackberry. Each of these companies has seen a large decline in share price driven in our view by overly-pessimistic sentiment.
American Growth Portfolio
We made no changes in February.
Income Portfolio
We made no changes in February.
Small Cap Portfolio
In February we bought new stakes in Aecon Group and Minto Apartment REIT. Each position has seen a large price decline over the last year, bringing entry prices down to an attractive level in our view.
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
March 2023 Update
Join the mailing list here
Despite stocks finishing lower in February, incoming data continue to support our case for an emergent bull market. In late September our proprietary indicators showed an exhaustion in negative sentiment, signaling a bottom in stocks was at hand. In January we observed the typical signals that usually arrive soon after major stock market bottoms. Now in February we saw several late-stage signals, which in our view have solidified a new bull market. Of these signals, the strongest is called the Golden Cross.
The Golden Cross happens when a shorter-term average of stock prices crosses above a longer term average, signifying a positive change in the short-term trend. If we look at the S&P 500 going back to 1900, and examine the first instance of seeing our version of the Golden Cross after stocks have already fallen at least 20%, some eye-popping statistics emerge. First, we should note the signal is extremely rare, occurring only 11 times since 1900. Three months after the signal, the average gain in stock prices is 5.1%, with a positive result 73% of the time. Six months later the average gain is 9.4%, with a positive result 82% of the time. And twelve months later, the average gain is 21.6%, with a positive result 91% of the time. When it comes to market statistics, this is about as good as it gets.
From a fundamental perspective, we believe economic data is supportive of a new bull market. Inflation continues to recede, economic growth is positive, employment is strong, real income is rising, consumer spending is strong, Wall St analysts are now raising 2023 earnings estimates, the Bank of Canada has affirmed a pause on rate increases, and the Fed has pledged to slow their pace of future rate hikes. This all looks like the calm after the storm.
Our base case is that markets can make significant gains in 2023, and new highs for the S&P 500, the Nasdaq, and TSX are not out of the question. The trend is up, and we continue to find compelling investment opportunities for income and growth.
Model Portfolio Highlights
Growth Portfolio
In February we took some profits on existing positions to purchase shares of three new companies, Chartwell Retirement Residences, Lightspeed, and Blackberry. Each of these companies has seen a large decline in share price driven in our view by overly-pessimistic sentiment.
American Growth Portfolio
We made no changes in February.
Income Portfolio
We made no changes in February.
Small Cap Portfolio
In February we bought new stakes in Aecon Group and Minto Apartment REIT. Each position has seen a large price decline over the last year, bringing entry prices down to an attractive level in our view.
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.