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Despite some volatility in stocks in July, our Growth and Income model portfolios recorded gains while our American Growth model portfolio closed flat for the month. Over the past seven months, we’ve witnessed a remarkable rally in our top-performing stocks. Last month, as some of these leaders consolidated gains, we saw the broader market catching up, creating a “breadth thrust”—a powerful indicator of widespread market strength. Historically, such breadth thrusts have been harbingers of double-digit returns in the year ahead. The last time we experienced a breadth thrust of this magnitude was in January 2023, which ignited the S&P 500’s impressive 33% rally to July’s month-end close, ending the 2022 bear market. We remain unwaveringly bullish in light of the data.

Economic indicators continue to paint a picture of resilience and growth. Inflation is moderating, employment remains steady, consumers are spending, household net worth is growing, and incomes are on the rise. As the number of Boomers retiring and Millennials forming households both increase over the next few years, we expect that consumer spending should likewise increase. Notably, growing wages have been outpacing inflation for several months now, fueling a resurgence in consumer confidence. GDP growth continues its upward trajectory. A recent upturn in lending demand, particularly in insured residential mortgages and industrial loans in the U.S.A., indicate a new credit cycle is underway, suggesting substantial boosts to consumer and corporate spending power in the months and years ahead. Historically, periods of high government deficit spending combined with lending growth have led to broadly strong economic outcomes.

It is no secret that much of our present growth is due to government spending. While some critics argue that healthy economic growth should only be driven by the private sector and not government spending, historical data tells a different story. In fact, the strongest economic expansions in history have occurred during periods of high government spending. Since 2020, we have seen such a shift towards government-led growth, with deficit spending driving significant economic activity fueling sectors and objectives critical to expansion. As long as these funds continue to circulate through the economy, we can expect growth to exceed expectations.

In this evolving economic landscape, high-quality stocks stand to benefit the most from massive government spending and lending growth. We are confident that stock prices are poised to rise significantly from current levels, presenting excellent opportunities for our portfolios. Our strategy is solid, our outlook is optimistic, and we are dedicated to maximizing returns for our valued investors.

Based on recent conversations, we believe that our clients are among the more fortunate investors experiencing such strong returns over the past year. We invite you to share our success with your friends and family, and to consider increasing your investment to take full advantage of the opportunities ahead.

Thank you for your trust and support. We look forward to continued success and prosperity.

Model Portfolio Highlights

Growth Portfolio
In July we took a large profit on Thomson Reuters, and trimmed back large gains in Shopify and Netflix. With those proceeds we added a new position in Amazon, and added to existing holdings in Microsoft and Descartes Systems.

American Growth Portfolio
In July we sold positions in Veeva and Danaher at a loss, while exiting Cloudflare and Intercontinental Exchange at a gain. We trimmed a large gain in Netflix. With the cash we added to positions in Intuit, Alphabet (Google), Microsoft and Moody’s. We also purchased a new position in Amazon.

Income Portfolio
We made no changes to the portfolio in July. We continue to hold a diversified basket of high quality stocks, allocated 2/3s to American companies and 1/3 to global companies.

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.

Thank you.

Yours,

Ben

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

Office: 416.369.3024
Email: bwk@wellington-altus.ca
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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.

Performance reporting disclaimer: Performance results reflect the returns of each representative model portfolio. Returns are calculated using each model portfolio’s monthly performance, including changes in securities values, and accrued income (i.e., dividend and interest), against its market value at the closing of the last business day of the previous month. Performance results are expressed in the stated strategy’s base currency and are calculated on a net of fees basis. Individual account performance may materially differ from the representative performance history set out in this document, due to factors such as an account’s size, the length of time the strategy has been held, the timing and amount of deposits and withdrawals, the timing and amount of dividends and other income, and fees and other costs. Investors should seek professional financial advice regarding the appropriateness of investing in any investment strategy or security and no financial decisions should be made solely on the basis of the information provided in this document. This is not an official statement from WAPW. Please refer to your official WAPW statement for your specific performance numbers.