Trump is impeached, yet the democrats did not send the paperwork to the senate even though an impeachment means there is an immediate risk to the U.S.A. Even so, stock markets went up!
Meanwhile in the U.K., Boris Johnson is elected Prime Minister of Britain with a resounding majority, promising to exit the E.U. by January 31st, 2020. Once more, the Sterling goes up!
Lesson: Forget trying to time the market. In order to time the market perfectly you have to make 2 correct decisions: When to sell, and then when to buy back in.
As of December 1st 2019, 51% of net cash inflows into ETF’s have gone into Fixed Income.
The American Association of Individual Investors does regular surveys on investor sentiment, and as of December 25, 2019 the results were: 41.9% Bullish, 36.6% Neutral and 21.5% Bearish.
In summary, over half of the net cash inflows in 2019 have gone into Bonds and over 57% of individual investors are either Neutral or bearish on their outlook for the markets.
The end result is that these investors are earning little or no return on their money while markets go up. You may have heard the expression: “Climbing the wall of worry.” We are watching this happen now.
The time to be worried about investing money in equities is when your Uber driver is giving you stock tips, and the majority of investors are bullish and net cash inflows are into equities.
Q4 2018 was terrible in the markets, which resulted in almost all our portfolios posting negative returns for that calendar year. It has been a relief for everyone to have a positive year in performance in 2019.
We have recently invested more money with Turtle Creek Asset Management. Their investment process is quite unique and not for everyone. They strive to achieve outsized returns, and in order to do so they will only buy companies where they believe the share price will be volatile. Turtle Creek received a lot of publicity a couple of years ago when they were a major shareholder of Home Capital. At the time Home Capital was trading at less than $10 per share. Today Home is over $33 per share.
A new investment for us in 2019 was with Greybrook Realty, and we were able to participate in their condominium project at Avenue Rd and Yorkville. We are hopeful to participate in future projects with Greybrook because of their Management Team and long-term successful performance track record.
On December 1st of 2019, recreational cannabis became legal in Michigan, and on January 1st, 2020 it was legal in Illinois, a state with a population of $12 million people. U.S. focused multi state operators have been growing their businesses at staggering rates, often at 25% to 30% quarter over quarter. It is interesting that they have been able to grow their businesses at this pace without access to Banking Services.
A challenge in the U.S. is that a resident of Ohio for example (where medical cannabis is legal), can drive into Michigan and buy cannabis for recreational purposes, but cannot transport this cannabis across the state line. I think legislation is going to have to change in the near future to reflect the realities of cannabis being a huge new industry.
In Canada, cannabis edibles are now legally being sold and Ontario is planning to greatly increase the number of cannabis stores. Both factors should help licensed producers increase their sales.
Our goal is to provide you with a rate of return on your investment portfolios in the range of 6% to 8% per year over the long term, which we regard to be 5 years or more.
Murphy’s Law often comes into play, for example:
There are times when we invest money and the market immediately goes down.
A money manager whom we have hired does not follow the process that we had relied on.
Or, I make a mistake and recommend an investment that doesn’t work out.
Whatever happens, our goal remains the same and I have to remedy whatever the problem or mistake is and aim to achieve our goal.
Other important services we provide include financial planning, tax and estate planning, and the daily administrative requirements that pertain to you.
You deserve consistent advice and the best service we are capable of providing.
Thank you for your continued confidence and support, and it is our privilege to help you with your wealth management.
Please call or email us if you have any questions or wish to discuss something specific.
Sincerely yours,
Fred Banwell
The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson GMP Limited or its affiliates. Assumptions, opinions and estimates constitute the author’s judgment as of the date of this material and are 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 circumstances and, if necessary, seek professional advice. Past performance is not indicative of future results. Richardson GMP Limited, Member Canadian Investor Protection Fund. Richardson and GMP are registered trademarks of their respective owners used under license by Richardson GMP Limited..