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Market Commentary

October 2023 Update

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While markets declined in September, they remain in a strong uptrend by our estimates. Major indices, including the S&P 500 and the Nasdaq, revisited pivotal lows we mentioned in last month’s note, yet they did not substantially breach these levels. In our view, this sets the stage for a potential acceleration in market gains as we approach year-end.

Expanding on our previous assessment of stimulative economic conditions from last month, we continue to observe signs of growing economic momentum. Our non-consensus view is that this is partly due to higher interest rates in an era of record high debt-to-GDP. It is worth noting that personal interest payments on debt in the U.S., such as mortgages and credit cards, reached a record of $506 billion in July. However, the flip side of the coin is equally impressive, with personal income receipts from assets, including dividends and interest income, reaching a staggering level of almost $3.5 trillion. In times of elevated public debt, often referred to as “Fiscal Dominance,” interest income tends to rise significantly faster than interest expenses.

This fiscal stimulus has contributed positively to the U.S. Federal Reserve’s estimated annual GDP growth of 4.9% for the third quarter, while consensus among analysts for 2025 indicates year-over-year revenue growth of 3.9% and earnings growth of 12.2% for stocks, based on I/B/E/S data by Refinitiv. Most notably, analysts in recent weeks have been revising their revenue estimates higher for most stocks in the S&P 500 —a development we have not seen since 2021—a trend that historically coincides with the onset of new bull markets.

In addition to these favourable indicators, market seasonality is firmly on our side. Going back to the inception of the S&P 500, when the index has been in positive territory year-to-date at the end of September, as it stands today, the average return for stocks from October 1 to January 1 has been an impressive 5.56%, with an 84% success rate. Furthermore, in years when both August and September have posted returns of less than -1%, as is the case in 2023, fourth-quarter returns have averaged 4.56%, with a 70% success rate.

In light of the prevailing conditions, our conviction in a strong year-end finish for stocks has grown. We remain steadfast in our optimism.

Model Portfolio Highlights

Growth Portfolio
We made no changes to the holdings in September.

American Growth Portfolio
We strategically harvested some gains from positions in Netflix, Tesla and Apple to purchase new positions in Broadridge Financial Solutions, Starbucks, and Roper Technologies. Each of these additions boast consistently top-tier returns on equity, with stock prices demonstrating strong long-term uptrends. We view these as exceptional businesses available at attractive valuations.

Income Portfolio
We made no changes to the holdings in September.

Small Cap Portfolio
We reduced our positions in Kits Eyecare and Data Communications to initiate new stakes in real estate developer Dream Unlimited and North American car dealer AutoCanada. We see economic growth coupled with a housing shortage positively supporting Dream’s $24 billion real estate portfolio. Furthermore, we’ve witnessed strong performance in new light vehicle sales in Canada, up 18% from the previous year. This appears to mark the beginning of a return to normalcy after years of supply-chain constraints.

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:

Thank you.



Ben W. Kizemchuk
Portfolio Manager & Investment Advisor
Wellington-Altus Private Wealth

Office: 416.369.3024
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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.

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