For What It's Worth - August 2018
First I will start off with a quick indication of BENCHMARK returns for various levels of equity (E) and fixed income (F). These benchmarks are comprised of ETF’s (exchange traded funds) and the TD Bond fund which I use as a proxy for fixed income.
Benchmark comprised of:
As the chart shows those with higher levels of risk/volatility have higher returns year to date. Someone with 70% equity would be in the 3.31% range and someone with 70% fixed income would be in the 1.21% range year to date.
The performance of the Ontario Teachers’ Pension Plan backs up this data as their return for the first 6 months of the year is 3.2% (see article below)
I have had several call, emails and even meetings over Trump and concern over equity markets and drop in accounts.
FIRST RULE OF FIGHT CLUB…actually just one of many rules-guideline…political headlines are often short term opportunities and do not affect the market long term.
What does affect the market long term? EARNINGS-EARNINGS-EARNINGS.
Earnings are higher year or year so stock prices should be higher year over year. That is the metric that we need to be concerned with.
What we need to ask ourselves is…will earnings in the next several quarters be higher than the year before?
CORE CLIENT POSITIONS
Below are the year to date returns of our core positions. The first 3 are TACTICAL funds holding equity and bonds. The final fund is only fixed income.
The current focus continues to be the addition of PRIVATE DEBT and PRIVATE EQUITY positions into client portfolios with the intent of maintaining target returns BUT reducing volatility. These positions include TREZ CAPITAL, AVENUE LIVING APARTMENTS and CENTURION APARTMENTS. If you have not completed the paperwork to allow this then please contact the office to have a discussion regarding the benefits and suitability for your portfolio.
FOR THOSE INTERESTED IN THE CURRENT ‘MISFITS AND OPPORTUNITIES’ POSITIONS (UP TO 10% OF CERTAIN CLIENTS ACCOUNTS) PLEASE FORWARD ME THE REQUEST. THESE ARE MEANT TO BE SHORTER TERM POSITIONS
The chart below shows some of the large short term moves on larger stocks within this sector (marijuana)
Current large price moves are the result of ‘deals’ being done and the belief that deals will continue to be done by LARGER beverage firms and perhaps other industries (tobacco?)
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‘historical analysis does not reflect future returns’