March Madness Continues


March 2020

A pair of Black Swans

Over the weekend, Russia and OPEC failed to come to an agreement over the price of oil and the volume of its production. Instead of agreeing to disagree, they started down the path of price tag limbo - how low can you go? The result has been a tremor felt in markets around the world with the projected price of oil dropping to the lowest value since it's previous collapse in 2016. This is weighing heavily on energy names which unfortunately represent a large percentage of the Canadian index. The sudden shock to this global commodity has spilled over into the broader market as market investors are still busy trying to digest the impact of CoViD-19.

In respect to the CoViD-19 outbreak, we would note a positive indicator: cases in China and Korea seem to be tailing and we view this as the light at the end of the tunnel. In our opinion, the media is focusing on the wrong statistics, often quoting the total case count. The more important number is active cases, which has improved significantly over the past few weeks with the gross majority of patients recovering and being discharged. Nonetheless, the number of cases are ramping up in North America, and we expect the news flow to get worse before it gets better. There is no doubt that the outbreak and the fear it is causing will have a material impact on the global economy over the coming months. However, we do not see this as a permanent inhibitor to growth. We anticipate the effects will be temporary, and once the virus runs its course, we expect economic activity and market growth to return to normal.

As we noted in our market memo two weeks ago, our allocation to alternatives has helped reduce the volatility in our managed portfolios and we continue to see value in these uncorrelated strategies. We have recently added a new alternative strategy to our model, a global arbitrage fund that's goal is to generate positive returns that are not correlated to market volatility. For more information on what arbitrage is and how it works as an investment, check out this primer. While many of our equity names have pulled back from their recent highs, we remain confident in the underlying quality of their businesses and balance sheets to weather the storm at hand. The concept of owning good companies that have the fortitude to succeed in diverse market conditions has been a guiding principle of our investing process. We continue to closely monitor the situation on your behalf. If you have any questions please let us know.

To end on some high notes:

  • Low oil prices are a good thing for many industries and may help the ailing transportation sector stabilize.
  • A price war doesn't benefit either Russia or OPEC so we anticipate they will try to negotiate a deal.
  • We expect additional economic stimulus from governments and central banks as they face yet another surprise.


Notice: 2019 Tax Slip Checklist will be mailed next week!


The Tax Slip Checklist provides a personalized summary of the tax slips you may receive based on the activity and holdings within your account for the given tax year. Each year, we receive distribution information from our underlying investments and collect this for you in our tax package. This checklist is scheduled to be mailed out next week so you should expect to receive it shortly. If you would like to see it earlier, it is available in your tax portal on our website

Please keep in mind that the tax slips may be mailed by their issuers as late as March 31st, so please be careful that you have all your tax slips in hand if you wish to file before mid-April.

For assistance with your tax information, please reach out to Tom Dalinghaus by e-mail at Thomas.Dalinghaus@RichardsonGMP or by phone at 604.640.0528.